CORPORATE MARKETING PLANNING

MARKETING STRATEGIES Guiltinan, Paul & Madden, Chapter 2

Strategic Management

Is crucial to building a successful business. Involves developing a game plan to guide a company as it strives to accomplish its mission, goals , and objectives, and to keep it on its desired course.

Strategic Management Process

Step 1. Develop a vision and translate it into a mission statement. Step 2. Assess strengths and weaknesses. Step 3. Scan environment for opportunities and threats. Step 4. Identify key success factors.

Strategic Management Process

(continued)

Step 5. Analyze competition. Step 6. Create goals and objectives. Step 7. Formulate strategies. Step 8. Translate plans into actions. Step 9. Establish accurate controls.

Step 1: Develop a Vision and Create a Mission Statement

Vision the result of an entrepreneurs dream of something that does not exist yet and the ability to paint a compelling picture of that dream for everyone to see. A clearly defined vision:

Provides direction Determines decisions Motivates people

Step 1: Develop a Vision and Create a Mission Statement

Addresses question: What business are we in? The mission is a written expression of how the company will reflect an entrepreneurs values, beliefs, and vision more than just making money.

A mission statement should address

1) Customers (the target market) 2) Products/services (offerings and value provided to customers) 3) Geographic markets (where the organisation seeks customers) 4) Technology (the technology used to produce and market products) 5) Concern for survival/growth/profits (the organisations concern for being financially sound) 6) Philosophy (the organisations values, ethics, beliefs) 7) Public image (contributions the organisation makes to communities) 8) Employees (the importance of managers and employees) 9) Distinctive competence (how the organisation is better than or different from its competitors).

Step 2: Assess Company Strengths and Weaknesses

Strengths

Positive internal factors a company can draw on to accomplish its mission, goals, and objectives. Negative internal factors that inhibit a companys ability to accomplish its mission, goals, and objectives.

Weaknesses

Step 3: Scan for Opportunities and Threats

Opportunities

Positive external factors the company can exploit to accomplish its mission, goals, and objectives. Negative external factors that inhibit the firm's ability to accomplish its mission, goals, and objectives.

Threats

The Power of External Market Forces

Technological Competitive Economic

Political and Regulatory

Social and Demographic

Threats & Opportunities

Major Environmental Forces:

Demographics Social and cultural values

Economic factors
Technology Legal and regulatory actions Competition

Strengths & Weaknesses

Firms strengths are analyzed by identifying its resources and competencies Resources and competencies include;

Financial resources Labor and managerial skills Production capacity and efficient equipment Research and development skills and patents

Control over ke raw materials

Size and expertis of sales force Efficient and effective distribution channels and systems

A firms strongest resource or competency is generally referred to as a core competency

COMPETENCY
R&D Capability

POTENTIAL USE
Emphasize high technology in product development Acquiring other business

EXAMPLE
3M

Financial resources

Philip Morris acquires Kraft Motorola emphasizes markets familiar with its success in electronics

Company reputation for quality

Select markets where reputation is known

Step 4: Identify Key Success Factors

Key success factors: controllable variables that determine the relative success of market participants. The keys to unlocking the secrets of competing successfully in a particular market segment.

Identifying Key Success Factors

List the skills, characteristics, and core competencies that your business must possess if it is to be successful in its market segment.

Key Success Factor

How Your Company Rates Low 1 2 3 4 5 6 7 8 9 10 High Low 1 2 3 4 5 6 7 8 9 10 High Low 1 2 3 4 5 6 7 8 9 10 High Low 1 2 3 4 5 6 7 8 9 10 High Low 1 2 3 4 5 6 7 8 9 10 High

1. 2. 3. 4. 5. Conclusions:

Step 5: Analyze Competitors

Analyzing key competitors allows an entrepreneur to:

Avoid surprises from existing competitors new strategies and tactics. Identify potential new competitors and the threats they pose. Improve reaction time to competitors actions. Anticipate rivals next strategic moves.

Step 5: Analyze Competitors

Techniques do not require unethical behavior:

Monitor industry and trade publications. Talk to customers and suppliers. Regularly debrief employees, especially sales representatives and purchasing agents. Attend trade shows and conferences and study competitors sales literature. Watch for employment ads from competitors to get an idea about their plans for the future. Conduct patent searches for patents competitors have filed.

Step 5: Analyze Competitors

Techniques do not require unethical behavior:

Learn about the kinds of equipment and raw materials competitors are importing Buy competitors products and benchmark them. Get competitors credit reports. Check out the reports publicly held by competitors Check out the resources in your local library. Use the World Wide Web to learn more about competitors. Visit competing businesses to observe their operations.

Step 6: Create Company Goals and Objectives attributes to be Goals - broad, long-range

accomplished. Objectives - more detailed, specific targets of performance that are S.M.A.R.T.

Specific Measurable Attainable Realistic (yet challenging) Timely

Step 7: Formulate Strategies

Strategy - a road map of the actions an entrepreneur draws up to achieve a companys mission, goals, and objectives. It is the companys game plan for gaining a competitive advantage. Three basic strategies:

Cost leadership

Strategy?

Differentiation

Focus

Three Strategic Options

Competitive Advantage
Uniqueness Perceived by the Customer Low Cost Position

Industry

Differentiation

Low Cost

Target Market
Niche

Differentiation Focus

Cost Focus

Cost Leadership

Goal: to be the low-cost producer in the industry (or market segment). Low-cost leaders have an advantage in reaching buyers who buy on the basis of price, and they have the power to set the industrys price floor. Works well when:

Buyers are sensitive to price changes. Competing firms sell the same commodity products. A company can benefit from economies of scale.

Differentiation
Company seeks to build customer loyalty by positioning its goods or services in a unique or different fashion. Idea is to be special at something customers value. Key: Build basis for differentiation on a distinctive competence, something that the small company is uniquely good at doing in comparison to its competitors. Examples: the Ice Hotel

Focus

Company selects one or more customer segments in a market; identifies customers special needs, wants, or interests; and then targets them with a product or service designed specifically for them. Strategy builds on differences among market segments. Rather than try to serve the total market, the company focuses on serving a niche (or several niches) within that market.

Step 8: Translate Strategies into Action Plans

Create projects by defining:

Purpose Scope Contribution Resource requirements Timing

Step 9: Establish Accurate Controls

Plan establishes the standards against which actual performance is measured. Entrepreneur must: identify and track key performance indicators. take corrective action.

Balanced Scorecards

A set of measurements unique to a company that includes both financial and operational measures Gives managers a quick, yet comprehensive, picture of a companys overall performance.

Balanced Scorecards

Four Perspectives:
Customer: How do customers see us? Internal Business: At what must we excel? Innovation and Learning: Can we continue to improve and create value? Financial: How do we look to shareholders?

The Balanced Scorecard Links Performance Measures

Financial Perspective
Goals Measures

How do we look to shareholders?

How do customers see us?

At what must we excel?

Customer Perspective
Goals Measures

Internal Business Perspective

Goals Measures

Innovation and Learning Perspective

Goals Measures Can we continue to improve and create value?

Corporate Marketing Planning

is the process by which an organization sets its long term priorities regarding products and markets in order to enhance the value of the overall company

Elements of Corporate Marketing Planning

Corporate Strategy

Which products to offer

Which markets to serve

Product Mix Strategy

What each product should contribute to the firm

How resources should be allocated across products

Factors Influencing Corporate Strategy

Environmental Threats and Opportunities

Corporate Mission and Objectives

CORPORATE STRATEGY

Organizational Strengths and Weaknesses

Corporate Mission and Objectives

Corporate mission describes the broad purposes the

organization serves and provides general criteria for

assessing long-run organizational effectiveness.

Corporate objectives reflect managements specific

expectations regarding organizational performance.

The process of developing a corporate strategy

Examining environmental threats and opportunities Selecting corporate objectives Acquiring any additional competencies required for successful implementation

Types of Corporate Strategies

GROWTH STRATEGIES

For Current Markets

Market Penetration Product Development Vertical Integration

For New Markets

Market Development Market Expansion Diversification

CONSOLIDATION STRATEGIES
Retrenchment Pruning Divestment

Market Penetration

Aim: increasing sales of existing products in the

current markets

Increasing the level of marketing effort

Status quo strategy

Example???
Coca-Cola in Turkey Advertising strategies in Ramazan Support some sport teams etc.

Product Development

Development of new products for existing markets in order to

meet changing customer needs

match new competitive offerings take advantage of new technology

meet the needs of specific market segments

Replacing or reformulating existing products Example???

Sana Crme Bonjour

Vertical Integration

When a firm becomes its own supplier

backward integration
forward integration

When a firm becomes its own intermediary

These strategies will be most appropriate

When the ultimate markets have high growth potential

Example???
Pnar Hindi Backward integration

Market Development Market Development

Current products to new markets When existing markets are stagnant Current products to new markets When market-share increases are difficult to When existing achieve markets are stagnant Because; When market-share market shares increases are difficult are already very high to achieve competitors are very powerful Because; Identify new users or new uses market shares Example??? already are

very high competitors Johnson & Johnson are very Shampoo powerful Example???

Market Expansion

Moving into a new geographic market area.

A regional strategy implies that a company will concentrate its resources and efforts in one or two areas A multinational strategy involves a commitment to a broad range of national markets

A global strategy is employed when an organization operates

in a broad set of markets but with a common set of strategic principles

Example???
Beko

Diversification

New products and new markets This strategy is likely to be chosen when

No other growth opportunities

Unstable sales or profits

The firm wishes to capitalize on a core competence

Example???
Miko (France) Algida Frisko (Denmark)

Langnese (Germany)

Consolidation Strategies

Retrenchment Opposite of market development A firm reduces their existing products by withdrawing from weaker market Pruning A firm reduces the number of products offered in a market Opposite of product development Divestment A firm sells off a part of its business to another organization Example???

Product Mix Strategy

What objectives will be established for each product or business

How various products or business will be prioritized for the purpose of allocating scarce resources

Product Life Cycle

Sales and Profits ($) Profits Time Product Development Losses/ Investments ($)

Sales

Introduction

Growth

Maturity

Decline

MAJOR CONTRIBUTIONS OF PLC

Provide to know more about the market opportunities Enable a firm to project future costs and profits

Product life cycle

Table 2.2

Product life-cycle stages and their potential strategies

Applications of the Product Life Cycle

The PLC concept can describe a:

Generic need (i.e. sales of all cars) Product class which has the longest life cycles (i.e. gas-powered cars), Product form which tend to have the standard PLC shape (i.e. minivans), Brand which can change quickly because of changing competitive attaches and responses (i.e. Ford Taurus)

Generic

need life cycle are seldom useful for strategy purposes

Problems Using the PLC

Trouble identifying Which Stage of the PLC the Product Is In

Difficult to Forecast the Sales Level, the Length of Each Stage, and Shape of the PLC

Strategy is Both a Cause and a Result of the Products Life Cycle

BCG Matrix
MarketDominance
High Low

Market Growth Rate

High

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

Problem Childs

High growth, low share Build into Stars or phase out Require cash to hold market share

Cash Cows
Low growth, high share Established, successful SBUs Produce cash

Dogs
Low growth & share Low profit potential

Low

BCG Matrix BCG Matrix

R&D
Cash Generated Cash Use 0 ---

Market Dominance STAR H

Cash Generated Cash Use ++ ---

_____________________ Net ---

PROB. CHILD
Cash Generated Cash Use + ---

_____________________ Net 0. -

_____________________ Net ---

Market Growth Rate

CASH COW $
+++ -

DOG
Cash Generated Cash Use + -

Cash Generated Cash Use

_____________________ Net ++

_____________________ Net -.0

The Directional Policy Matrix

Competitive Position Market Attractiveness
Strong High Average Weak

Maintain leadership Challenge leader Cash generator

Challenge leader Manage for earnings Harvest

Overcome weakness Harvest

Medium

Low

Divest

The Business Screen

Competitive Position Market Attractiveness
Strong High Average Weak

BUILD QUESTION

Medium

HOLD HARVEST
Low

TERMINATE

Ge/Mckinsey business screen

Figure 2.9

The GE/McKinsey business screen portfolio matrix

Source: Adapted from Kerin et al. 1990

Limitations of Portfolio Models

Portfolio models implicitly assume that the portfolio must be in cash balance

Portfolio models suggest that cash cows can be milked with impunity

Portfolio models indicate that resources should be invested in stars and in problem child products

The BCG Model is criticized for relying on only two elements while the Directional Policy Matrix accommodates a large number of factors.
Identify the important synergistic relationships

Specifying Product Objectives

Market-Share Growth Market-Share Maintenance Cash Flow Maximization

Sustaining Profitability
Harvesting Establishing an Initial Market Position

Relationship Between Corporate Marketing Planning and Middle-Management Activities

CORPORATE MARKETING PLANNING
Environmental Threats and Opportunities Corporate Mission and Objectives CORPORATE STRATEGY Markets to serve Product objectives PRODUCT MIX STRATEGY Allocation of resources Product objectives Organizational Strengths and Weaknesses

Product Portfolio Analysis

Situation Analysis Buyer behavior and segments Competition Market size and growth Product profitability Sales productivity

MARKETING STRATEGIES AND PROGRAMS Feasibility of achieving product objective

Chapter 2 Opening up analysis and positioning

The interaction between operand and operant resources in the value-creation process

The interaction between operand and operant resources in the valuecreation process
Figure 2.1

The representation of various internal resources in relation to their value for customers, and with the competitive strength

The representation of various internal resources in relation to their value for customers and strength against competition
Figure 2.2

Horizontal/vertical positioning

The process of horizontal/vertical positioning of a firm in the value-added chain of activities

Figure 2.6

Porter analysis

Figure 2.7

Porters five forces model of industry analysis

Source: Adapted from Porter 1985

Porter factors

Industry concentration Range and diversity of competitors Product differentiation Capacity utilisation and exit barriers Cost advantages and disadvantages Buyer and supplier power Threat of substitutes

The influence of technology Porters five forces

Figure 2.8

The influence of technology on the five forces identified by Porter

Product life cycle

Table 2.2

Product life-cycle stages and their potential strategies

BCG analysis

Figure 2.3

The BCG product portfolio matrix

Rogers diffusion theory

Relative advantage Compatibility Complexity Trialability and observability

Rogers diffusion theory (Continued)

Figure 2.4

The typology of new product users

Ge/Mckinsey business screen

Figure 2.9

The GE/McKinsey business screen portfolio matrix

Source: Adapted from Kerin et al. 1990

The directional policy matrix

Figure 2.10

The directional policy matrix

Source: Robinson et al. 1978

Business prospects and company capability

Business prospects

Market growth
Market quality Environmental aspects. Companys competitive capabilities Market position Production capability Product research and development.

Growth and product capabilities

Figure 2.11

Growth vector analysis

Source: Rowe et al. 1986

The centralised information system implemented by customer-focused organisations

The centralised information system implemented by customer-focused organisations

Figure 2.12

Segmentation factors to consider

The macro-environment
The sector in which an organisation operates Its portfolio of products and services

An understanding of consumer characteristics

An understanding of physical variations such as geographic location and environment

Market segmentation factors

Is the market segment measurable? Is the market segment accessible? Is the market segment substantial? Can marketing strategies be actioned to serve the segment?

Segmenting markets

Figure 2.13

Segmenting markets

Observable and unobservable segmentation characteristics

Table 2.5

Segmentation criteria

Source: Adapted from Frank et al. 1972

The operational requirements for implementing customer-oriented strategies based on customer lifetime value analysis

The operational requirements for implementing customer-orientated strategies based on customer lifetime value analysis
Table 2.9
Source: Guru and Ranchhod 2002

The operational requirements for implementing customer-oriented strategies based on customer lifetime value analysis (Continued)

The operational requirements for implementing customer-orientated strategies based on customer lifetime value analysis (Continued)
Table 2.9
Source: Guru and Ranchhod 2002

Segmentation

Table 2.7

The Warner index of social classification

Source: Adapted from Hawkins, Best and Coney 2004. Reproduced with permission of The McGraw-Hill Companies

Family lifecycle

Table 2.8

The stages of the family life lifecycle

Source: Wells and Gubar 1966

Psychographic segmentation

Figure 2.14

Psychographic segmentation

Customer lifetime value

Figure 2.15

Seven-step process for measuring customer lifetime value

The interrelation between the three determinants of strategic positioning

Figure 2.17

The interrelatedness of the three determinants of strategic positioning

The representation of car market positioning on a perceptual map, considering the price ad the design as salient features

Representation of car market positioning on a perceptual map, considering price and design as the salient features
Figure 2.18

Postmodern factors

Figure 2.20

Postmodern marketing as a juxtaposition of opposites

Source: Adapted from Cova 1996

New segmentation factors for consideration

Figure 2.21

The postmodern consumer and postmodern segmentation