Creating and Implementing Market-Oriented Strategic Planning Module 2 Creating and Implementing Market-Oriented Strategic Planning Kotler’s Chapter 3 and 22

Chapter 3: Winning Markets: Market-Oriented Strategic Planning Learning Objectives 1. Describe what is strategic planning on the corporate level and the eight major steps involved in business strategic planning. 2. Discuss the business portfolio techniques utilized in assigning resources to SBUs. 3. Describe the strategic options available in planning new businesses and downsizing older businesses. 4. Describe the value delivery sequence. 5. Describe what is involved in creating a mkting plan.

Chapter 3/Objective 1: Describe what is strategic planning on the corporate level. Market-Oriented Strategic Planning - the managerial process of developing and maintaining a viable fit between the organization’s objectives, skills, and resources and its’ changing market opportunities. The aim is to shape the company’s businesses so they yield target profits/growths. Corporate and Division Strategic Planning Defining the corporate mission Establishing strategic business units (SBUs) Assigning resources to each SBU (Obj 2) Planning new businesses, downsizing older businesses (Obj 3)

Chp 3/Obj 1: Describe what is strategic planning on the corporate level cont. Defining the corporate mission Ask some fundamental questions as to what is the business, why does it exist, whose needs is firm trying to serve, what does firm value? Need to convey a shared sense of purpose and direction to all stakeholders. Need to define competitive scope: industry, product/applications, competence, market-segment, vertical, and/or geographical scope.

Chp 3/Obj 1: The Eight Major Steps in Business Strategic Planning 1. Business Mission - define specific mission 2. SWOT Analysis (2 steps) a.External Environment Analysis - Opportunity/Threats Marketing opportunity is an area of buyer need in which a company can perform profitably (look at in terms of attractiveness and success probability). Environmental threat is a challenge posed by an unfavorable trend or development that would lead in the absence of defensive marketing action to deterioration in sales/profits (look at in terms of seriousness and probability of occurrence). b.Internal Environment Analysis-Strengths/Weaknesses

Chp 3/Obj 1: The Eight Major Steps in Business Strategic Planning Cont. 3. Goal Formulation Goals state qualitative direction (ex. Increase Profits) while Objectives are needed to quantify this direction by stating the performance dimension from the goal, a measure for evaluating progress, a benchmark and target level, and a time frame (ex. Increase profits from $1 million this year to $1.5 million at the end of next year). Need both goals + objectives. These need to be arranged hierarchically (most important first), be realistic, and consistent/compatible with each other.

Chp 3/Obj 1: The Eight Major Steps in Business Strategic Planning Cont. 4. Strategic Formulation - Game plan to meet goals/objectives Porter’s 3 types: cost leadership, differentiation, focus/customer intimacy. 5. Program Formulation - Create action plans that detail tactics that must be done for strategy. 6. Implementation - carry out plan 7. Feedback and Control - measure if plan worked/objectives met, consider/track environment, and if any changes to plan is needed.

Chp 3/Obj 2: Discuss the business portfolio techniques in assigning resources to SBUs. Boston Consulting Group Looks at market growth rate and relative market share Categorizes SBUs as Stars, ?, Cash Cows, and Dogs Determine whether to build, hold, harvest, or divest General Electric Model Looks at market attractiveness and business strength in terms of both quantitative and qualitative measures. Uses weightings and ratings to evaluate factors of each dimension.

Diversification Growth Downsizing Older Businesses Chp 3/Obj 3: Describe the strategic options in planning new or downsizing older businesses. Intensive Growth Market Penetration, Marketing Development, and Product Development Integrative Growth Backward, Forward, or Horizontal integration Diversification Growth Concentric, horizontal, and conglomerate Downsizing Older Businesses Prune, harvest, or divest tired old businesses to release needed resources and reduce costs.

Chp 3/Obj 4: Describe the value delivery sequence Traditional Physical Process Sequence Make the product and sell the product Value Creation and Delivery Sequence Choose the Value - strategic marketing with segmentation, market selection, positioning. Provide the Value - tactical marketing of product, price, and place. Communicate the Value - tactical marketing with the promotional mix.

Chp 3/Obj 5: Describe what is involved in creating a marketing plan. Executive Summary and Table of Contents Current Marketing Situation (Situation Analysis) Opportunity and Issue Analysis (SWOT) Objectives (Outcomes) Marketing Strategy Action Programs (Plans/Tactics) Projected P/L Statement (Financials) Controls Also could include References and Exhibits. See tutorial.

Chapter 22: Managing the Total Marketing Effort Learning Objectives 1. Describe the six stage evolution of the marketing department. 2. Describe the trends in organizing the marketing department in the firm. 3. Describe the options in evaluating and controlling marketing efforts.

Chp 22/Obj 1: Six Stage Evolution of Marketing Department Simple Sales Department - outsiders do marketing Sales Department with Ancillary Marketing Functions - Marketing director reports to Sales Separate Marketing Department - Marketing Department separate from Sales Department Modern Marketing Department - Marketing Department responsible for all marketing and sales efforts Effective Marketing Company-All depts focus on customer Process and Outcome-Based Company-cross disciplinary teams focus on key process such as new products

Chp 22/Obj 2: Describe the trends in organizing the MKTG department in the firm Functional - functional specialists Geographic - regional managers Product or Brand Management - manager responsible for a variety of tasks for a product Market-Management - manager responsible for a specific market (customer group) Product-Management/Market-Management (Matrix Organization) - managers responsible for each discrete market and managers responsible for each product Corporate-Divisional - balancing corporate versus divisional marketing responsibilities

Chp 22/Obj 2: Describe trends in organizing the MKTG department in the firm cont. Need to address Marketing relations with other departments; balance politics/views - perspective. Marketing needs to effectively work with R&D, Engineering, Manufacturing, Operations, Finance, Accounting, Credit, etc… Managers need to develop systems that make a market orientation possible (i.e. carrying out the marketing concept) and reinforce/reward those who make those systems work.

Chp 22/Obj 3: Describe the options in evaluating/controlling marketing efforts Marketers need to continuously monitor and control marketing activities. 1. Annual/Plan Control - mgmt by objectives Sales Analysis - sales variance and microsales analysis Market-Share Analysis - take with a grain of salt Marketing Expense-to-Sales Analysis - how much bang for the buck is one getting from marketing efforts Financial Analysis - ratios Market-Based Scorecard Analysis - track customer stats

Chp 22/Obj 3: Describe the options in evaluating/controlling mktg efforts cont. Profitability Control Marketing-Profitability Analysis but need to address how to assign indirect/common costs, correct problems. Efficiency Control Sales force, Advertising, Sales-Promotion, and Distribution Efficiency (are these efforts working). Strategic Control Marketing-effectiveness review (measure if carrying out marketing concept) Comprehensive marketing audit (done by an outsider).

Module 2 Creating and implementing market-oriented strategic planning. Chapters 3 and 22 Any questions?