Objectives

How is strategic planning carried out at the corporate & division levels? How is the planning carried out at Business unit level? Major steps in marketing process How is planning carried out at the Product level? What does a marketing plan include?

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Strategy & Strategic Planning

A medium to long term plan for how to achieve an objective (long time targets that are measurable and have time scale) Strategic Planning: Companys game plan for achieving its long-run objectives SP calls for action in three key areas

1- Managing a companys business as an investment portfolio 2- Assessing each business strength in terms of market growth rate, companys position & fit in the market 3- Establishing a strategy for each business

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Strategic Planning Process

Corporate Level: is responsible for designing a corporate strategic plan to guide the whole enterprise i.e. decisions made for allocation of resources to each division & Which business to start or eliminate? Divisional Level: each division makes a divisional plan further allocation of funds to each business unit within the division Business Unit Level: BU develops a strategic plan to carry the business unit into a profitable future Product Level: Each product level (product line or brand) within a BU develops a marketing plan for achieving its objectives in its product market

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Market-Oriented Strategic Planning

Objectives Resources

Skills

Opportunities

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Market-Oriented Strategic Planning

Objectives Resources

Profit and Growth

Skills Opportunities

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Strategic-Planning, Implementation, and Control Process

Planning
Corporate planning Division planning Business planning Product planning
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Implementation
Organizing

Control
Measuring results Diagnosing results

Implementing Taking corrective action

Corporate Headquarters Planning

Define the corporate mission Establish strategic business units (SBUs) Assign resources to SBUs Plan new business, downsize older businesses

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Defining the Corporate Mission

An Organizations purpose of existence? What is our business? Who is the customer? What is of value to the customer? What will the business be? What should the business be?
Mission statements are at their best when guided by a vision, an almost impossible dream that provides a direction to the company for next 10 to 20 years Mission may change to take advantage of new opportunities or responding to new market conditions

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Our Mission is to add vitality to life. We meet every day needs for nutrition, hygiene and personal care with brands that help people look good, feel good and get more out of life
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Vision: To launch Pakistan into the 21st century digital revolution by providing complete communication solutions to Telecom operators, Corporate & Consumers Mission: (i) To provide affordable communication services that meets & exceeds customers requirements (ii) To deliver high quality, flexible and innovative solutions that are cost effective (iii) To provide complete customer satisfaction on time, every time

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Good Mission Statements:

Limited number of goals Stress major policies & values Define competitive scopes
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Establishing Strategic Business Units

Most companies operate & Manage several businesses each requiring its own strategy GE classified its businesses into Strategic Business Units (SBUs) An SBU has three characteristics

1- It is a single business or collection of related businesses that can be planned separately from the rest of the company 2- It has its own set of competitors 3- It has a manager who is responsible for strategic planning & profit performance and who controls most of the factors affecting profit

Purpose of identifying SBUs is to develop separate strategies and assign appropriate funding Business portfolio includes Yesterdays has-beens & Tomorrows winners

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The Boston Consulting Groups Growth-Share Matrix

20%18%16%14%12%10%8%6%4%2%0 10x

Market Growth Rate

Stars

Question marks

?
2x 1.5x 1x

5
Cash cow

?2
7

Dogs

8 6
4x .5x .4x .3x .2x .1x

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Relative Market Share

Growth Share Matrix

Question Marks: businesses that operate in high growth markets but have low relative market share,it requires lot of cash as the company has to to invest (Plant equipment & Personnel) to keep up with the fast growing market and to over take market leader Stars: are the market leaders in a high growth market,star does not produce a positive cash flow but the company spend substantial funds to keep up the market growth and to fight off competition

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Growth Share Matrix

Cash Cows: stars with a falling growth rate that still have the largest relative market share & produce a lot of cash for the company, the company do not need to finance expansion as the market growth rate has slowed, business is the market leader & enjoys higher profit margins, cash cows are used to pay bills and support other businesses Dogs: Businesses with weak market share in low growth markets, the company mite hold the business for good reasons

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The Strategic Planning Gap

The companys plan for its existing business help it to project total sales & profits which are often less than what corporate management want than it to be If there is a gap between future desired sales & projected sales three options are available to fill the strategic planning gap Intensive growth: Identify opportunities to achieve further growth within current businesses, a useful framework for detecting new intensive growth opportunities is Product- Market expansion grid

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Three Intensive Growth Strategies: Ansoffs Product/Market Expansion Grid

Existing products Existing markets New products

1. Market penetration

3. Product development

New markets
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2. Market development

4. Diversification

Product/Market Expansion Grid

Market Penetration: making more sales to current customers without changing the product; How? add new stores in current market areas, make convenience for customers, improve advertising, price adjustments, adjustment in channel of distribution, redesigning of outlets Market Development: develop new markets for current products; How? Identify new demographic or geographic markets

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Product/Market Expansion Grid

Product Development: Offering modified or new products to current markets, Why? Customers preferences changed, technology changed; How? Bring new styles, new colors, new packaging modify product & add features to attract more customers Diversification: new products for new markets; How? start new business in a growing market to avail opportunities and grab market share

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Strategic Planning Gap

Integrative growth : Business sales & profits can be increased through Backward integration (Acquisition of Suppliers) to gain more control or generate profits Forward integration (Acquisition of wholesalers & Retailers) who are highly profitable Horizontal Integration (Acquisition of one or more competitors) depends on government rules & regulations

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Strategic Planning Gap/Planning New Businesses

Diversification

Growth: When companies find good opportunities outside the present business, where the industry is highly attractive & the company has mix of business strengths to be successful

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The Strategic-Planning Gap

Desired Desired sales sales Diversification growth Integrative growth Intensive growth Current Current portfolio portfolio

Sales

Strategicplanning gap

0
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5 Time (years)

10

Business Unit Strategic Planning

Business Mission: SWOT Analysis: Over all evaluation of companys strengths, weaknesses, opportunities & threats Goal Formulation Strategy Formulation Program Formulation Implementation Feedback & Control

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External Environment Analysis (Opportunities & Threats)

BU monitors key macro environment forces (demographic, economic, technological, political, legal & Social- cultural) & significant microenvironment actors (customers, competitors, distributors, suppliers) that effects its ability to earn profits BU MIS tracks trends and market developments to identify associated opportunities & threats Company applies Market opportunity analysis to determine attractiveness & success probability of opportunity Threats are classified according to seriousness & probability of occurrence.

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External Environment Analysis

Marketing opportunity: is an area of buyer need or potential interest in which a company can perform profitability. Opportunities can take many forms and marketers have to be good at spotting them Environmental threat: is a challenge posed by an unfavorable trend or development that would lead to decline in sales or profit in the absence of defensive marketing action.

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External Environment Analysis

An

ideal business is high in major opportunities & low in major threats A speculative business is high in both major opportunities & threats A mature business is low in major opportunities & low in threats A troubled business is low in opportunities & high in threats
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Opportunity Matrix
Success Probability
High Low

Opportunities
1. Management should pursue these opportunities 2. Should be monitored in the event that any improve in attractiveness & success probability 3. Should be monitored in the event that any improve in attractiveness & success probability 4. Too minor to be considered

Attractiveness

High

Low
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Threat Matrix
Probability of Occurrence Threats 1. Major threats, can hurt the Low High

High

Low
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company seriously,high probability of occurrence,company prepares a contingency plan to make changes before or during the threat 2. Do not require contingency plans but need to be monitored carefully before they grow more serious 3. Do not require contingency 4. Very minor & can be ignored

Seriousness

Internal Environment Analysis (Strengths & Weaknesses)

Marketing : Company reputation, Market share, customer satisfaction, customer retention, product quality, service quality, pricing, distribution, promotion, sales force effectiveness, innovation, geographical coverage Finance: Cash flows, Financial stability Manufacturing: Capacity, Workforce, Production, Technical skills Organization: Visionary, leadership, dedicated employees, Environment, motivation, perks & benifits

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Goal Formulation

Goals are objectives that are specific with respect to magnitude & time Objectives include profitability, sales growth, market share improvement, innovation & reputation BU set objectives and then manages by objectives (MOB)

1- Arranged hierarchically from the most to least important 2- stated quantitatively (increase ROI to 15% within two years) 3- Goals should be realistic (based on analysis not wishful thinking) 4- must be consistent

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Strategic Formulation

Goals indicates what a BU wants to achieve & strategy is a game plan for getting there Porters Generic Strategies: Over all cost leadership: Lowest production & Distribution costs to lower price than competitors & win a large market share. Differentiation: Businesses concentrates on achieving superior performances in important customer benefit area valued by large part of the market i.e produce best components, utilize expertise, inspect products & effectively communicate their quality. Focus: The business focus on one or more narrow market segments to pursue either cost leadership or differentiation within the target segments

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Strategic Formulation

Strategic Alliances: To be effective & achieve leadership Companies build Strategic partnerships nationally & Globally (Global Strategic Network) Marketing Alliances: Product or Service Alliance: Once company license another to produce its products or jointly market their new product Promotional Alliances: One company agrees to carry out promotion of products for another company Logistic Alliances: One company offers logistical services to another Pricing Collaborations: One or more companies join in a special pricing collaborations to offer mutual price discounts.

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Program Formulation & Implementation

Once the Business Unit has developed its principal strategies it must work on detailed supporting programs The formulation of Marketing programs helps the marketing people to estimate their costs i.e to participate in trade shoes or not? Develop a sales contest? Hiring of sales people? Analyze activity based costs etc A great marketing strategy can be damaged by poor implementation

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The Value-Delivery Process

(a) Traditional physical process sequence Make the product
Design Procure Make product

Sell the product

Price Sell Advertise/ Distribute Service promote

(b) Value creation & delivery sequence Choose the Value Provide the Value Communicate the Value

Strategic marketing
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Tactical marketing

The Marketing Process

The

marketing process consists of analyzing market opportunities; researching and selecting target markets; designing marketing strategies; planning marketing programs; and organizing, implementing and controlling the marketing effort

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The Marketing Plan

Executive Summary & Table of Contents Current Marketing Situation Opportunity & Issue Analysis Objectives
in sales volume, market share, profit and other relevant terms opportunities and identify key issues likely to effect organizations objectives Background on sales, costs, profits, market

Competitors, channels and information used for SWOT

Management reviews the main

Product manager outlines the plans major financial and marketing goal, expressed

Marketing Strategy
How will Progress be measured?

Product manager defines target segment,Positining

Action Programs

What will be done? When? Who? Costs?

Projected Profit-and-loss Controls

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Marketing
in Ma fo rk sy rm eti st at ng em io n

Demographic/ economic environment

intermediaries

Strategy Marketing
Product
M pl ark sy ann etin st in g em g

Technical/ physical environment

Suppliers

Place
or Ma g r sy ani ket st z a i n g em tio n

Target Price customers

or M im ga ar pl niz ke em at tin en ion g ta a tio nd n

Publics

Promotion

Political/ legal environment

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Competitors

Social/ cultural environment

Review
Corporate and division strategic planing Business unit planning The marketing process Product level planning The marketing plan

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