Developing Marketing

Strategies and Plans

 Reasons for Planning
If we do not know where we are going any
road will take us there.
The future is unpredictable but it is not a
random walk.
The essence of strategic planning is the
consideration of current decision
alternatives in the light of their probable
consequence over time.
 Strategic Planning
Successful companies know how to adapt to a
continuously changing market place. They
practice the art of market – oriented strategic
planning.

Strategic planning is the process of

developing and maintaining a feasible fit
between the organization’s objectives,
skills, and resources and its changing
marketing opportunities.
 Strategic Planning
Calls for action in three key areas :
(i) Managing the company’s businesses
as an investment portfolio
(ii) Assessing each business’s strength
by considering the market’s growth
rate and the company’s position and fit
in that market.
(iii) Making the strategy
 THE STRATEGIC PLANNING,
IMPLEMENTATION AND CONTROL PROCESS

Planning Implementing Controlling

Corporate Measuring
Organizing
Planning results
Division Implementing
Planning Diagnosing
results
Business
Planning Taking
Product corrective
Planning action
 Corporate and Division Strategic
Planning–Four Planning Activities
• Defining the corporate mission.
• Establishing strategic business units.
• Assigning resources to each SBU.
• Developing growth strategies
 Corporate Strategic Planning (cont.)
Defining the corporate mission
To define mission, a company should address Peter
Drucker’s classic question:
– What is our business? Who is the customer? What is of value to
the customer? What will our business be? What should our
business be?
A clear, thoughtful mission statement provides
employees with a shared sense of purpose, direction
and opportunity.
– What do we do best? What are the values/ethics of
the firm?
– Define business by need rather than product.
Lodging vs hotel
Quick service restaurants vs fast food hamburgers
– Marketing myopia - Transportation vs railroad
 Corporate Strategic Planning (cont.)
Defining the corporate mission
Good mission statements have three major
characteristics :
- focus on a limited number of goals
- stress the major policies and values that the
company wants to honor
- define the major competitive scopes within which
the company will operate
The mission should define the competitive scopes within
which the company will operate. Industry scope,
products and applications scope, competencies scope,
market-segment scope, vertical scope and geographical
scope.

• Mission statements are at their best when they are

guided by a vision, an almost “impossible dream”
that provides a direction for the company for the
next 10 to 20 years.
 ESTABLISHING STRATEGIC
BUSINESS UNITS
Most companies operate several businesses.
They often define their businesses in terms
of products. But according to Levitt, a
business must be viewed as a customer-
satisfaction process, not a goods-producing
process. Products are transient, but basic
needs and customer groups endure forever.
A business can be defined in terms of three
dimensions : Customer groups, Customer
needs, and Technology.
CHARACTERISTICS OF AN
SBU …….
It is a single business or collection of
related businesses that can be planned
separately from the rest of the
company
It has its own set of competitors
It has a manager who is responsible for
strategic planning and profit
performance and who controls most of
the factors affecting profit
Corporate Strategic Planning-
Assigning resources to each SBU.

The purpose of identifying the company’s

SBUs is to develop separate strategies
and assign appropriate funding.
Managers need some analytical tools for
classifying their businesses by profit
potential.
Two models (analytical tools) are best
known models for portfolio analysis.
 PORTFOLIO ANALYSIS
One of the tools used in analyzing market
scenarios and strategic decisions
concerning product mix is the portfolio
analysis.
(A) The B C G Model
( Boston Consulting Group’s Model )
(B) The G E Approach
( General Electric Approach )
 Analyzing Current SBU’s:
Boston Consulting Group Approach
Relative Market Share
1.0X
High

High Low
Market Growth Rate

Stars Question Marks

?
• High growth & share • High growth, low share
• Profit potential • Build into Stars or phase out
• May need heavy • Require cash to hold
investment to grow market share
10%

Cash Cows Dogs

• Low growth, high share • Low growth & share
• Established, successful • Low profit potential
SBU’s
Low

•Produce cash

(BCG Model assumes a market growth rate of 10% as the cut-off point.
The market share is expressed in log scale and 1.0 is taken as a cut-off
point.)
 PORTFOLIO ANALYSIS
(B) THE G E APPROACH
The problem with the BCG model is that the
cut-off point taken on the market growth rate
to classify high growth and low growth
markets is arbitrary, and in most cases 10 %
is too high a growth rate. To overcome this
problem and also to consider factors
contributing to market growth and share, the
GE (General Electric) approach comes in
handy. ( Contd.. )
 PORTFOLIO ANALYSIS
(B) THE G E APPROACH

High GREEN
Market
Attract-
iveness
Medium YELLOW

Low RED

High Medium Low

Firm’s Strengths (Contd..)
 PORTFOLIO ANALYSIS
(B) THE G E APPROACH
Market attractiveness is measured by factors
like market size, annual growth rate,
competitive intensity, rate of technological
development, government policy and
influence of other interest groups.
Competitive position is assessed by factors
like market share, annual growth in market
share, customer loyalty or brand loyalty,
product quality, brand image, distribution
network, productivity, R&D, financial position
etc.
 PORTFOLIO ANALYSIS
(B) THE G E APPROACH
On examining the product portfolio of a firm, one
may find that some SBUs/Products may fall in the
green segment, some in the yellow and some in the
red segment.

SBUs/Products in green segment require to be

developed and supported, in yellow segment require
to be monitored carefully, and in red segment are to
be harvested or divested for obvious reasons of
moderate to weak competitive position in an
unattractive market.

Thus in evaluating the product mix of a firm, we have

to examine each product or product line from the
point of view of market attractiveness and its
competitive position.
 Corporate Strategic Planning-
Assessing Growth Opportunities
The company’s plans for its existing
businesses allow it to project total
sales and profits. Often, projected
sales and profits are less than what
corporate management wants them to
be. If there is a strategic planning gap
between future desired sales and
projected sales, corporate management
will have to develop or acquire new
businesses to fill it.
 GROWTH OPPORTUNITIES
( winning markets through market-
oriented strategic planning )

Desired Sales Diversification growth Strategic

Planning
Integrative growth
Gap
Sales Intensive growth

Current Portfolio

Time (Years)
 HOW CAN THE COMPANY FILL THE
STRATEGIC PLANNING GAP ?
(GROWTH OPPORTUNITIES)

Three options are available :

Intensive Growth Opportunities

Integrative Growth Opportunities

Diversification Growth Opportunity

 (GROWTH OPPORTUNITIES)
INTENSIVE GROWTH
Identify opportunities to achieve further
growth within the company’s current
business.
Ansoff has proposed a useful
framework for detecting new intensive
growth opportunities called a product /
market expansion grid.
 (GROWTH OPPORTUNITIES)
INTENSIVE GROWTH
Product/ Market Expansion Grid
Existing New
Products Products
Existing 1. Market 3. Product
Markets Penetration Development

New 2. Market
4. Diversification
Markets Development
 Corporate Strategic Planning-
Developing Growth Strategies

– Intensive growth opportunities: Identify

further opportunities to achieve growth within
the company’s current business.
Market penetration strategy seeks to
increase current products in current
markets.
Market development strategy looks for
new markets in which current products can
expand.
Product development strategy considers
new product possibilities
 (GROWTH OPPORTUNITIES)
DIVERSIFICATION GROWTH
- Diversification growth opportunities:
Identify opportunities to add attractive
businesses that are unrelated to the
company’s current businesses.
Concentric diversification strategy:
Company seeks new products that have
technological and/or marketing synergy
with existing product lines, even though the
product may appeal to a new class of
customers
Corporate Strategic Planning
(cont.)
Horizontal diversification strategy:
Company searches for new products
that could appeal to its current
customers though technologically
unrelated to its current product line.
Conglomerate diversification
strategy.
 (GROWTH OPPORTUNITIES)
INTEGRATIVE GROWTH
- Integrative growth opportunities.
Backward integration: A hotel company
acquiring one of its suppliers.
Forward integration: A hotel company
acquiring travel agents.
Horizontal integration: A hotel company
acquiring one or more competitors,
provided the government does not bar the
move.
 Business Strategy Planning –
Planning at the SBU Level
Business mission
External environment analysis–
opportunities and threats
Internal environment analysis–
strengths and weaknesses
4.Goal Formulation (What do we want?)–
The vision
Business Strategy Planning (cont.)
5.Strategy Formulation (How do we get
there?)
- Michael Porter’s three generic types of strategy:
Overall cost leadership
Differentiation
Focus
– Strategic Alliances: companies need to form
strategic alliances with domestic or multinational
companies that complement or leverage their
capabilities and resources to achieve leadership
nationally or globally.
Business Strategy Planning (cont.)
6.Program formulation. A company must
develop hiring, training, advertising, and
other programs to support its strategy.
7. Implementation. A firm must
communicate its strategy to its employees
and it must have the resources to carry
out its strategy.
8. Feedback and control are absolutely
necessary to track results and monitor
new developments in the environment.