CHAPTER TWO Strategic Planning and Budgeting

STRATEGIC BUSINESS UNIT...is a single product or brand, a line of products, or a mix of related products that meets a common market need or a group of related needs.

STRATEGIC BUSINESS UNIT (SBU) operates as a separate business has separate management has distinct mission statement has unique customer segments has own competitors has a separate planning function

STRATEGIC MANAGEMENT PLANNING Business Mission Establishing Goals Developing Strategies

BUSINESS MISSION Mission statements provide a sense of direction They may outline: –growth & profitability objectives –philosophy & values

BUSINESS MISSION Factors impacting it’s creation include: –Environmental constraints –Firm’s history –Existing competencies –Resources

FROM THE INTERNET Mission Statements = Profits

FROM THE INTERNET Read about setting personal mission statements at: Also, read the previous article entitled “Future Trends in Sales and Marketing”

GOALS AND OBJECTIVES Goals are qualitative; objectives are quantitative Hierarchy

STRATEGY “A strategy is a means an organization uses to achieve its objectives.”

GENERIC BUSINESS STRATEGIES (Porter) Low Cost Differentiation Niche

LOW COST STRATEGY IMPLICATIONS Service large, current accounts Pursue large prospects Sell on the basis of price

DIFFERENTIATION STRATEGY IMPLICATIONS Sell non-price benefits Provide high quality service Train sales force to provide quality

NICHE STRATEGY IMPLICATIONS Become an expert on target market Focus on non-price benefits

BUSINESS STRATEGIES (Miles and Snow) Prospectors Defenders Analyzers Reactors

MILES AND SNOW-- IMPLICATIONS Prospector –Focus on sales volume; prospecting Defender –Maintain current customers; emphasize service Analyzer –Balance servicing and prospecting –Consider new products

MARKETING STRATEGY Selection of a target market Development of a marketing mix

MARKETING STRATEGY Starts with a situational analysis A snapshot of where we are today

SITUATIONAL ANALYSIS Demand trends: forecasts, sales Consumer Behavior: who buys, who makes the decision Social/cultural factors Economic and business conditions Technology Competitive and corporate environment

FROM THE INTERNET Situational Analysis for State of Hawaii-- Department of Tourism

SALES MANAGEMENT STRATEGIES Sales force strategy Account relationship strategy

SALES FORCE STRATEGY Company Managed Sales Force Distributor Networks Hybrid Systems

ACCOUNT RELATIONSHIP STRATEGY Repeat transactions Contractual relationships Major account relationships Strategic partners See chart, page 59

SALES BUDGETING

A sales budget is a set of planned expenses that is prepared on an annual basis (Text; page 62)

BUDGETING PROCESS Design marketing strategy Estimate sales Estimate personal selling costs Compare actual expenditures with estimates Revise where necessary

SALES BUDGET RESEARCH Sales expenses relate to sales growth Salespeople pay better returns than advertising Percentage of sales method still remains most popular approach to budgeting

FROM THE TEXT Read everything in Chapter 2 (46 to 66).