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
<http://www.smartbiz.com/sbs/arts/
hph4.htm>
FROM THE INTERNET
• Read about setting personal mission
statements at:
<http://www.salestrainingplus.com/
articles.htm#MissionStatement>
• 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
<http://kumu.icsd.hawaii.gov/tourism/
STP/SWOT.html>
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
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).