Company & Marketing Strategy

(Chapter 2)

Binish Nida Afaque Lecture 2 21-05-2009 1

Strategic planning
Strategic planning is an organization's process of defining its strategy, or direction, and making decisions on allocating its resources to pursue this strategy, including its capital and people
Strategic planning is the formal consideration of an organization's future course.

Strategic Planning

All strategic planning deals with at least one of three key questions: "What do we do?" "For whom do we do it?" "How do we excel?"
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Strategic planning Strategic Planning

The Managerial decision process that matches the organizations resources & capabilities to its market opportunities for long-term growth

Developing and maintaining a strategic fit between organizational goals and capabilities, and changing marketing opportunities.

Steps in strategic planning

Figure 2.1
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Step 1: Defining the marketing oriented Mission Statement

Mission statement: A statement of an organizations purpose. What it wants to accomplish in the larger environment Need to be market-oriented, specific, realistic, and motivating It should not be too narrow or too broad Mission: Defines the fundamental purpose of an organization or an enterprise, basically describing why it exists. It concentrates on the present. It defines the customer and the critical processes. It informs you of the desired level of performance.
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Step 1: Defining the marketing oriented Mission Statement

Some companies define their missions myopically in product or technology terms . But mission statement should be market oriented and define in terms of customer needs.

Mission Statement
Company
Revlon

Product-oriented definition
We make cosmetics

Market-oriented definition
We sell lifestyle and selfexpression; success and status; memories, hopes and dreams We empower consumers to achieve the homes of their dreams

Home Depot

We sell tools, home improvement items, and automotive parts and accessories

Mission should fit the market environment

The Girl Scout of USA would not recruit successfully on the basis of its former mission To prepare young girls for motherhood and wifely duties

New Mission A place where girls grow strong

Vision and Mission Statement

A Vision statement outlines what the organization wants to be. It concentrates on the future. It is a source of inspiration. It provides clear decision-making criteria. Vision describes what will be achieved if the organization is successful. E.g. To be recognized and respected as one of the premier associations of HR Professionals The Vision describes a future identity while the Mission serves as an ongoing and timeindependent guide. Mission statement defines the purpose or broader goal for being in existence or in the business and can remain the same for decades if crafted well.

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Few Examples
Disney "To make people happy" Boeing "To push the leading edge of aviation, taking huge challenges doing what others cannot do" 3M "To solve unsolved problems innovatively

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Step 2: Setting Objectives and Goals

It should be SMART
Specific Measurable Achievable Realistic Time-bound

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Step 3: Designing the Business Portfolio

The Collection of businesses and products that make up the company is called Business Portfolio Portfolio Analysis (major activity in strategic planning) The process by which management evaluates the products and businesses making up the company Business Portfolio planning involves two steps Analyzing the current portfolio Shaping the future portfolio
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1. 2.

Step 3: Designing the Business Step 3: Designing the Business Portfolio Portfolio
Portfolio analysis allows a firm to assess the potential of its products and businesses
Company wants to phase down weaker ones and put strong resources into more profitable businesses. The first step is the identification of the SBUs A strategic business unit (SBU)is a unit of the company that has a separate mission and objectives that can be planned independently. SBU can be a company division, a product line with a division, a single product or brand.
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BCG Growth-Share Matrix

A portfolio planning method that evaluates a companys SBUs in terms of their market growth rate and relative market share.
Strategies for SBUs Build Hold Harvest Divest
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BCG Matrix: Stars

SBUs with dominant market share in highgrowth markets
requires funding to keep up with production and promotion demands strategies seek to maximize market share in the face of increasing competition

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BCG Matrix: Cash Cows

SBUs with dominant market share in a low-growth potential market
product is well established and market share can be maintained with minimal funding firms milk cows of profits to fund growth of other products in portfolio

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BCG Matrix: Question Marks

SBUs with low market shares in fast-growth markets
sometimes called problem children the firm has failed to compete effectively

The dilemma? Investing more money into the SBU may

improve market share in a high potential market OR result in negative cash flow and failure
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BCG Matrix: Dogs

SBUs with small market share in a slowgrowth market
specialized products in limited markets unlikely to grow firms may sell dogs to smaller firms or eliminate product from market

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Developing Strategies for Growth

Product-market expansion grid: A portfolio planning tool for identifying company growth opportunities

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Developing Strategies for Growth Developing Strategies for Growth

Product-Market Growth Matrix illustrates different growth strategies
Market penetration: increase sales in existing markets Market development: introduce existing products to new markets Product development: introduce new products to existing markets Diversification: introduce new products in new markets
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Downsizing:
Reducing the business portfolio by eliminating products or business units that are not profitable or that no longer fit the companys overall strategy.

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Step 4: Planning Marketing: Partnering to Build Customer Relationships

Marketings role in strategic planning: Provides a guiding philosophy marketing concept Provide inputs to help identify marketing opportunities and assess potential for taking advantage of them Designs strategies for reaching objectives Partner relationship management: Working closely with partners in other company departments and outside the company to jointly bring greater value to customers Value chain is the series of departments (manufacturing, marketing, purchasing,IT, operations etc) that carry out value- creating activities to design produce, market, deliver, and support a firms products. Value delivery network is made up of the company, suppliers, distributors,and ultimately customers who partner with each other to improve the performance of entire system.

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Marketing Strategy and the Marketing Mix

The marketing process:
Analyzing marketing opportunities Selecting target markets Developing the marketing mix, and Managing the marketing effort

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Marketing Strategy and the Marketing Mix

Market Segmentation Dividing a market into distinct groups of buyers who have distinct needs, characteristics, or behavior and who might require separate products or marketing mixes. Market segment is a group of consumers who respond in a similar way to a given set of marketing efforts. Target Marketing The process of evaluating each market segments attractiveness and selecting one or more segments to enter. Market Positioning Arranging for a product to occupy a clear, distinctive, and a desirable place relative to competing products in the minds of target consumers. A products position is the place the product occupies relative to competitors in consumer's mind
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The Four Ps of the Marketing Mix

The marketing mix:
Set of controllable, tactical marketing tools Blended to produce the desired response in the target market
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The Four Ps Versus Cs

Product Customer solution

Price

Customer cost

Place

Convenience

Promotion

Communication

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Managing the Marketing Effort

Four marketing management functions: Marketing analysis Marketing planning (What and Why) Implementation(doing things
right), (who, where, when and how)

Control

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Managing the Marketing Effort

Marketing Control Operating Control involves checking ongoing performance against the annual plan and taking corrective measures when necessary Strategic Control involves whether the companys basic strategies are well matched to its opportunities. Marketing Audit Marketing Audit is a comprehensive, systematic, independent and periodic examination of a companys environment,objectives, strategies and activities to determine problem areas and opportunities
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Contents of a Marketing Plan

Executive summary Current marketing situation Market description, product review, competition, and distribution Threat and opportunity analysis Objectives and issues Marketing strategy Action program Budgets Controls

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