CHAPTER 4

MARKETING STRATEGIC PLANNING

CONTENT

DEFINITION OF STRATEGIC PLANNING MARKETING STRATEGIC CONCEPT MARKETING MANAGEMENT CONCEPT THE STEPS IN STRATEGIC PLANNING THE IMPORTANCE IN MARKETING STRATEGIC PALNNING CORPPORATE STRATEGIC PLANNING BUSINESS STRATEGIC PLANNING

DEFINITION OF STRATEGIC PLANNING

The process of developing and maintaining a strategic fit between the organizations goals and capabilities and its changing marketing opportunities. It involves defining a clear company mission, setting supporting objectives, designing a sound business portfolio and coordinating functional strategies.

MARKETING STRATEGY CONCEPTS

Strategic Three Cs Customer

Identify customer needs and wants that suitable with the company goals and objectives. Importance to have a good relationship with customers.

MARKETING STRATEGY CONCEPTS

Corporation
Fulfill the needs and wants to customers in order to deliver maximum satisfaction to them. Provide distinctive with competitors in product.

Competition
Competitive advantage give motivation to companies for improvement. The companies alert towards competitors strategy to increase their productivity and quality.

MARKETING MANAGEMENT CONCEPTS

Where to compete?
Determine the market to enter.

How to compete?
The strategy that be used.

When to compete?
The time to enter the market

Strategic Planning
Planning

activities occur at the business unit, product, and market levels, and include:
Defining the purpose and mission Setting objectives and goals Designing the business portfolio Developing detailed marketing and departmental plans
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Strategic Planning
Mission

statements should . . .

serve as a guide for what the organization wants to accomplish. be market-oriented rather than product-oriented. be neither too narrow, nor too broad. fit with the market environment. be motivating.
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Strategic Planning

Mission statements guide the development of objectives and goals.

Objectives are developed at each level in the organization hierarchy. Strategies are developed to accomplish these objectives.

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Strategic Planning
Business portfolio: the collection of businesses and products that make up the company. Designing the business portfolio is a key element of the strategic planning process.

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THE IMPORTANT MARKETING STRATEGIC PLANNING Accommodate the production and services with needs and wants of consumer. The example of accommodate in term of new production, modification existing production, modification of pricing, add or reduce the current product and services. On going research of the new development in market the take the opportunities.

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THE IMPORTANT MARKETING STRATEGIC PLANNING

Build relationship between firm and environment. The reason to allow the firm to determine and form product mix and the services. Besides that, firm can use as decision process in term of raw material, production process, production design, channel and financial resources.
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THE IMPORTANT MARKETING STRATEGIC PLANNING

From a good business portfolio. The strategic planning allow firm to define a clear mission statement, develop supportive objective to company, form a good business portfolio and other strategies functions. The managers be able to think and react effectively with referring the planning objectives.

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Corporate and division strategic planning

The corporate head quarters must undertake four planning activities:

Defining corporate mission Establishing strategic business units (SBUs) Assigning resources to each SBU Planning new business

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Defining the corporate mission

The purposes:
What is our business? Who is our customer? What is the value to the customer? What will business be? What should our business be?

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Defining the corporate mission

The five elements:

History Current preferences of the owner and management Market environment Resources Distinctive competences

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Defining the corporate mission

The major competitive scope in defining mission statement:

Industry scope product and application scope Competencies scope Market segment scope Vertical scope Geographic scope

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Establishing SBUs
Company Shiseido Canon Petronas Astro Daikin Fuji Pioneer Product We make cosmetics We make copying equipment We sell gasoline We arrange satellite production We make air conditioners We make films We make karaoke sets Market definition We sell hope We help improve office productivity We supply energy We market entertainment We provide climate control in the home We preserve memory We help you sing

Product oriented versus market oriented definitions of a business

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Assigning resources to each SBU

Purpose:
Identify the companys SBU to develop separate strategies and assign appropriate funding.

The two business portfolio:

Boston consulting group model (BCG) General electric model (GE)

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Assigning resources to each SBU

Portfolio Design

Identify strategic business units (SBUs) Assess each SBU:

The BCG growthshare matrix classifies SBUs into one of four categories using the:
Market growth rate SBUs relative market share within the market.
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Step 1: Analyze the current business portfolio

Strategic Planning
BCG Growth-Share Matrix
High Market Growth

Stars

Question Marks

Low Market Growth

Cash Cows

Dogs

High Relative Market Share

Low Relative Market Share

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BCG Growth-Share Matrix

A portfolio planning method that evaluates a companys strategic business units in terms of their market growth rate and relative market share. SBUs are classified as stars, cash cows, question marks and dog.

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BCG Growth-Share Matrix

Stars
Stars are high growth, high share businesses or products. They often need heavy investment to finance their rapid growth. Eventually their growth will slow down, and they will turn into cash cows.

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BCG Growth-Share Matrix

Cash cows
Cash cows are low growth, high share businesses or products They establish and successful SBUs need less investment to hold their market share. They produce a lot of cash that the company uses to pay its bills and to support other SBUs that need investment.

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BCG Growth-Share Matrix

Question marks
Question marks are low-share business units in high growth markets. They require a lot of cash to hold their share, let alone increase it. Management has to think hard about which question marks it should try to build into stars and which should be phased out.

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BCG Growth-Share Matrix

Dogs
Dogs are low growth, low share businesses and products. They may generate enough cash to maintain themselves but do not promise to be large sources of cash.

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Strategic Planning
Portfolio Design

Step 2: Shape the future business portfolio

Determine the future role of each SBU and choose the appropriate resource allocation strategy:
Build Hold Harvest Divest

SBUs change positions over time

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Strategic planning

Build
Increase the SBU market share, foregoing short term earnings to achieve it Building is appropriate for question marks whose share have to grow if they are to become stars

Hold
Preserve the SBUs market share. Appropriate for strong cash cows if they are to continue yielding a large position cash flow.

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Strategic planning

Harvest
Increase the SBUs short term cash flow regardless for long term effect. Involves decision to eventually withdraw from a business by implementing a program of continuous cost retrenchment. Plan to cash in on its crop to milk its business Eliminating R&D expenditures Reduce the overhead costs eg. Advertisement
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Strategic planning

Divest
To sell or liquidate the business because resources can be better used elsewhere Appropriate for dogs and question marks that are acting as a drag on the companys profits.

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Strategic Planning
Matrix

approaches to formal planning share many problems:

Difficult, time-consuming, and costly to implement. Focus only on current businesses. Too strongly emphasize market share growth or growth via diversification.
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Strategic planning

The general electric model

The General Electric Business Screen was originally developed to help marketing managers overcome the problems that are commonly associated with the Boston Matrix (BCG), such as the problems with the lack of credible business information, the fact that BCG deals primarily with commodities not brands or Strategic Business Units (SBU's), and that cash flow if often a more reliable indicator of position as opposed to33

Strategic planning
The GE Business Screen introduces a three by three matrix, which now includes a medium category. It utilizes industry attractiveness as a more inclusive measure than BCG's market growth and substitutes competitive position for the original's market share.

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Market attractiveness-competitive position portfolio classification and strategies

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For market attractiveness:

Size of market. Market rate of growth. The nature of competition and its diversity. Profit margin. Impact of technology, the law, and energy efficiency. Environmental impact.

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competitive position:
Market share. Management profile. R & D. Quality of products and services. Branding and promotions success. Place (or distribution). Efficiency. Cost reduction.

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GE matrix

The GE matrix has 5 steps:

One - Identify your products, brands, experiences, solutions, or SBU's. Two - Answer the question, What makes this market so attractive? Three - Decide on the factors that position the business on the GE matrix.

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GE matrix

The GE matrix has 5 steps:

Four - Determine the best ways to measure attractiveness and business position. Five - Finally rank each SBU as either low, medium or high for business strength, and low, medium and high in relation to market attractiveness.

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Planning new businesses

Designing

the new business portfolio also involves:

Developing strategies for growth by identifying, evaluating, and selecting promising new market opportunities.
Product/market expansion grid

Developing strategies for downsizing the business portfolio.

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Strategic Planning
Product/Market Expansion Grid
Existing Products New Products

Existing Markets

Market Penetration

Product Development

New Markets

Market Development

Diversification

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Product/Market Expansion Grid

Market Penetration
market the existing products to the existing customers. This means increasing the revenue by, for example, promoting the product, repositioning the brand, and so on. However, the product is not altered and do not seek any new customers.

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Product/Market Expansion Grid

Market Development
The market existing product range in a new market. This means that the product remains the same, but it is marketed to a new audience. Exporting the product, or marketing it in a new region, are examples of market development.

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Product/Market Expansion Grid

Product Development
This is a new product to be marketed to the existing customers. develop and innovate new product offerings to replace existing ones. Such products are then marketed to the existing customers. This often happens with the auto markets where existing models are updated or replaced and then marketed to existing customers.
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Product/Market Expansion Grid

Diversification The market completely new products to new customers. There are two types of diversification, namely related and unrelated diversification. Related diversification means that we remain in a market or industry with which we are familiar. For example, a soup manufacturer diversifies into cake manufacture (i.e. the food industry). Unrelated diversification is where we have no previous industry nor market experience. For example a soup manufacturer invests in the rail business. 45

downsizing

Reducing the business portfolio by eliminating products of business units that are not profitable or that no longer fit the companys overall strategy.

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Business strategic planning

SWOT analysis is a tool for auditing an organization and its environment. It is the first stage of planning and helps marketers to focus on key issues. SWOT stands for strengths, weaknesses, opportunities, and threats. Strengths and weaknesses are internal factors. Opportunities and threats are external factors.

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SWOT Analysis

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SWOT Analysis

In SWOT, strengths and weaknesses are internal factors. For example: A strength could be: Your specialist marketing expertise. A new, innovative product or service. Location of your business. Quality processes and procedures. Any other aspect of your business that adds value to your product or service.
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SWOT Analysis

A weakness could be:

Lack of marketing expertise. Undifferentiated products or services (i.e. in relation to your competitors). Location of your business. Poor quality goods or services. Damaged reputation.

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SWOT Analysis

In SWOT, opportunities and threats are external factors.

For example: An opportunity could be: A developing market such as the Internet. Mergers, joint ventures or strategic alliances. Moving into new market segments that offer improved profits. A new international market. A market vacated by an ineffective 51 competitor.

SWOT Analysis

A threat could be:

A new competitor in your home market. Price wars with competitors. A competitor has a new, innovative product or service. Competitors have superior access to channels of distribution. Taxation is introduced on your product or service.
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