1 Chapter 4 Winning Markets Through Market-Oriented Strategic Planning by
PowerPoint by Milton M. Pressley University of New Orleans
2 Kotler on Marketing It is more important to do what is strategically right than what is immediately profitable.
3 Chapter Objectives In this chapter, we examine the following questions: How is strategic planning carried out at the corporate and division levels? How is planning carried out at the business unit level? What are the major steps in the marketing process? How is planning carried out at the product level? What does a marketing plan include?
4 Strategic Planning: Three Key Areas and Four Organization Levels
Strategic marketing plan Tactical marketing plan Marketing plan
5 Figure 4-1: The Strategic-Planning, Implementation, and Control Process
6 Corporate and Division Strategic Planning
All corporate headquarters undertake four planning activities Defining the Corporate Mission Establishing Strategic Business Units (SBUs) Assigning resources to each SBU Planning new businesses, downsizing, or terminating older businesses
7 Corporate and Division Strategic Planning
Defining the Corporate Mission Mission statements define which competitive scopes the company will operate in Industry scope Products and applications scope Competence scope Market-segment scope Vertical scope Geographical scope
8 Discussion Question Can you name a company that has recently changed its product scope or market segment scope in a very public way? Was this an expansion or contraction of scope?
9 Corporate and Division Strategic Planning
Establishing Strategic Business Units (SBUs)
10 Table 4.1: Product-Oriented versus Market-Oriented Definitions of a Business
Company Product Definition Market Definition Missouri-Pacific Railroad We run a railroad We are a people-and-goods mover Xerox We make copying equipment We help improve office productivity Standard Oil We sell gasoline We supply energy Columbia Pictures We make movies We market entertainment Encyclopaedia We sell encyclopedias We distribute Information Carrier We make air conditioners and furnaces We provide climate control in the home
11 Corporate and Division Strategic Planning
Three characteristics of SBUs Single business or collection of related businesses that can be planned for separately Has its own set of competitors Has a manager who is responsible for strategic planning and profit
12 The Growth-Share Matrix
Relative market share Four Cells Question Marks Stars Cash Cows Dogs SBU Strategies SBU Lifecycle
13 Figure 4-2: The Boston Consulting Group’s Growth-Share Matrix
14 Discussion Question Can you give an example of a “Star” that skipped “Cash Cow”, and went straight to “Dog” status?
15 Corporate and Division Strategic Planning
The General Electric Model
16 Figure 4-3: Market Attractiveness-Competitive-Position Portfolio Classification and Strategies
17 See text for complete table
Table 4-2: Factors underlying Market Attractiveness and Competitive Position in GE Multifactor Portfolio Model: Hydraulic-Pumps Market Market Attractiveness Overall market size Annual market growth rate Historical profit margin Competitive intensity Technological requirements Inflationary vulnerability Energy requirements Environmental impact Social-political-legal Weight 0.20 0.15 0.05 Must be acceptable 1.0 Rating = (1-5) 4 5 2 3 Value 0.80 1. 0.60 0.30 0.10 3.70 Business Strength Market share Share growth Product quality Brand reputation Distribution network 0.40 0.50 See text for complete table
18 Corporate and Division Strategic Planning
Critique of Portfolio Models Planning New Businesses, Downsizing Older Businesses
19 Figure 4-4: The Strategic-Planning Gap
20 Corporate and Division Strategic Planning
Intensive Growth
21 Figure 4-5: Three Intensive Growth Strategies: Ansoff’s Product-Market Expansion Grid
22 Starbucks’ home page: Customers can request a catalog of Starbucks products, subscribe to a newsletter, and shop online
23 Corporate and Division Strategic Planning
Integrative Growth Diversification Growth Downsizing Older Businesses
24 Discussion Question Give an example of a market segment where integrative growth would be preferable to growth through diversification. Explain why one approach is better than the other.
25 Figure 4-6: The Business Strategic-Planning Process
Business Unit Strategic Planning Figure 4-6: The Business Strategic-Planning Process
26 Business Unit Strategic Planning
Business Mission SWOT Analysis External Environment Analysis (Opportunity and Threat Analysis) Marketing Opportunity Buying opportunity more convenient or efficient Meet the need for more information and advice Customize an offering that was previously only available in standard form
27 Discussion Question Give some examples of companies that have grown to dominate their market segment by using technology to make buying opportunities more convenient and efficient.
28 Business Unit Strategic Planning
Marketing Opportunity Analysis (MOA) Can the benefits be articulated to a target market? Can the target market be reached with cost-effective media and trade channels? Does the company have the critical capabilities to deliver the customer benefits? Can the company deliver these benefits better than any actual or potential competitors? Will the rate of return meet the required threshold of investment?
29 Figure 4-7: Opportunity and Threat Matrices
30 Business Unit Strategic Planning
Internal Environmental Analysis (Strength/Weakness Analysis) Goal Formation Strategic Formulation Strategy
31 Business Unit Strategic Planning
Porter’s Generic Strategies Overall cost leadership Differentiation Focus
32 Travelocity’s Web site helps the consumer plan the whole vacation – flights, lodging, and car rental.com
33 Business Unit Strategic Planning
Operational Effectiveness and Strategy Strategic group Strategic alliances
34 Business Unit Strategic Planning
Marketing Alliances Product or service alliances Promotional alliances Logistical alliances Pricing collaborations Partner Relationship Management, PRM Program Formulation and Implementation
35 Figure 4-8: McKinsey 7-S Framework
36 Business Unit Strategic Planning
Feedback and Control
37 Figure 4-9: Two Views of the Value-Delivery Process
The Marketing Process The Value Delivery Sequence Figure 4-9: Two Views of the Value-Delivery Process
38 The Marketing Process Steps in the Planning Process
Analyzing Market Opportunities Developing Marketing Strategies Planning Marketing Programs Managing the Marketing Effort Annual-plan control Profitability control Strategic control
39 Figure 4-10: Factors Influencing Company Marketing Strategy
40 Product Planning: The Nature and Contents of a Marketing Plan
Contents of the Marketing Plan Executive Summary Current Marketing Situation Opportunity and issue analysis Objectives Marketing strategy Action programs Financial projections Implementation controls
41 Product Planning: The Nature and Contents of a Marketing Plan
Sample Marketing Plan: Sonic Personal Digital Assistant Current Marketing Situation Opportunity and Issue Analysis Objectives Action Programs Financial Projections
42 Product Planning: The Nature and Contents of a Marketing Plan
Implementation Controls Marketing Strategy Positioning Product Management Pricing Distribution Marketing Communications Marketing Research