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Discussion Questions
1
02
1. How is strategic planning carried
out at the corporate and divisional
levels?
Marketing Planning and
Development
2. How is strategic planning carried
out at the business unit level?
3. What does a marketing plan
include?
16/e
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Marketing‘s Role in Strategic Planning
Strategic Planning
• Focuses on customers & responds
effectively to changing needs
• The process of developing & maintaining
strategic fit between the org‘s goals &
capabilities and its changing MKT
opportunities
– All depts. accept that ‗the customer is king‘
• Prioritizes in 3 key areas
̶ Sets the stage for rest of the planning
– Manage businesses as an investment portfolio
̶ Adapts the firm to take advantage of
opportunities in its constantly changing envt.
– Assess market‘s growth rate & firm‘s position
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– Establish a strategy
2-3
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CORPORATE STRATEGIC
PLANNING
Three Organizational Levels
• Most large orgs consist of 3 orgl. levels &
MKT planning & MGT occur on these
levels
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2-2
2-5
1
Define the corporate mission
2
Set company‘s goals &
objectives
3
Design the business portfolio
4
Develop strategies for growth
& downsizing
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Define the Corporate Mission
Define the Corporate Mission
Setting a sound mission begins with Drucker‘s 5
classic questions:
• Org‘s core purpose or reasons to exist
an org
What do
customers value?
• A long-term goal that provides company
employees & MGT with a shared sense
of purpose, direction, & opportunity
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Definition of Mission
What will our
business be?
What is our
business?
What should our
business be?
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Definition of Mission
• Should be market-oriented & defined in
terms of satisfying basic customer needs;
not in terms of products & techs
– Products & techs are transient & become
outdated (truck)
– Basic needs or customer groups endure forever
(transportation)
• Focuses on customers & the customer
experience the firm seeks to create
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Who is the
customer?
2-9
Company
Product-oriented
Market-oriented
Starbucks
We sell coffee and
snacks.
We sell ―The Starbucks
Experience‖.
Xerox
We make copying
equipment.
We help improve office
productivity.
Revlon
We make
cosmetics.
We sell lifestyle & selfexpression; success and
status.
Paramount
Pictures
We make movies.
We market entertainment.
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Five Characteristics of Good Mission
Statements
Craft a Mission Statement
1. Focus on a limited number of goals
• Develop in collaboration with and share with
managers, employees, & customers
2. Stress major policies & values
– May change over time to respond to new
opportunities
3. Define the major markets that the
company aims to serve
– Acts as an invisible hand to guide employees
4. Take a long-term view
5. Are as short, memorable, & meaningful as
possible
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Mission of Google
Mission of eBay
Vague mission
―We help people trade anything on earth.
We will continue to enhance the online
trading experiences of all—collectors,
dealers, small businesses, unique item
seekers, bargain hunters, opportunity
sellers, and browsers.‖
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2-13
Set Company's Goals & Objectives
• Turn the broad mission into detailed
supporting objectives for each level of MGT
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Design the Business Portfolio
• Design business portfolios & develop
growth strategies
– Goals are the desired outcomes or achievable
tangible results
– Business portfolio is the collection of businesses
& products that make up the company
– Each manager should have objectives & be
responsible for reaching them
– The best business portfolio must fit the firm‘s S/Ws
to opportunities in the envt.
– The broad mission leads to a hierarchy of
objectives, including business & MKT objectives
– Specialized vs. diversified portfolio
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– GE has 49 SBUs
2-15
Analyze the Current Business
Portfolio
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Analyze the Current Business
Portfolio
3 characteristics of an SBU
• MGT first identify the key businesses making
up the company, called SBUs
A single business or
collection of related
businesses
• Then evaluate each SBU‘s attractiveness &
decide how to allocate corporate resources
to each SBU
Unique
competitors
– Put strong resources into its more profitable SBUs
& phase down or drop its weaker ones
– Apply building, holding, harvesting, & divesting
strategies
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Leader responsible
for planning & profit
performance
2-17
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Analyze the Current Business
Portfolio
BCG Growth-Share Matrix
Analyzing the Current Business Portfolio
BCG Growth-Share Matrix
– Classify SBUs based on market growth rate &
relative market share
Building
Holding
Harvesting
Divesting
Building
GE/McKinsey Matrix
– Classify SBUs based on competitive advantage &
industry attractiveness indices
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Holding
2-19
GE/McKinsey Matrix
Divesting
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Problems with Matrix Approaches
GE/McKinsey Matrix
HIGH
• Difficulty in defining SBUs and measuring
market share and growth
MED
• Expensive
• Focus on current businesses, not future
planning
LOW
Competitive Advantage
• Time consuming
• Ignores relationships between SBUs
LOW
MED
HIGH
Industry Attractiveness
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Develop Strategies for Growth &
Downsizing
Develop Strategies for Growth &
Downsizing
• MKT has the
responsibility for
achieving profitable
growth
• MKT has the
responsibility for
achieving profitable
growth
• MKT needs to identify,
evaluate, & select
market opportunities
& lay down strategies
for capturing them
New
Businesses
Opportunities
Downsizing
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Eliminate
Businesses
2-23
• MKT needs to identify,
evaluate, & select
market opportunities &
lay down strategies for
capturing them
New
Businesses
Opportunities
Downsizing
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Eliminate
Businesses
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Develop Strategies for Growth &
Downsizing
Identify the Target Market
The target market comprises 5 factors:
• To create value, the company needs to:
• The customers whose needs the
company intends to fulfill
– identify the target market
• The competitors that aim to fulfill
the same needs of the same target
customers
– design an optimal offering
• These activities include:
• The collaborators that help
the company fulfill the needs of
customers
– Strategy involves choosing a well-defined market
& determining the value
• The company that develops &
manages the offering
– Tactics (MKT mix) involves making the
company‘s strategy come alive
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• The context that will affect how the
company develops & manages the
offering
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Develop a Value Proposition
Fig: The 5-C Framework
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Strategic Planning Gap
Create superior value for the trios
• Add attractive
unrelated
businesses
• Customer value is the worth of an
offering to its customers
– How well an offering fulfills their needs
• Build or acquire
related businesses
• Company value is the worth of an
offering to the company
– Why to choose the offering instead of
alternative options
• Collaborator value is the worth of
an offering to the company‘s
collaborators
Projected sales
• Opportunity to grow
within current
businesses
Fig: The 3-V Market Value
Principle
– Why to choose the offering instead of
competitive alternatives
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Ansoff‘s Product/Market Expansion
Grid
Integrative Growth
A tool for identifying company growth opportunities
A firm can increase sales and profits through backward,
forward, or horizontal integration within its industry
Existing
products
New
products
Supplier
Existing
markets
New
markets
Business
Wholesaler
Competitor
FIGURE 2.3 The Product/Market Expansion Grid
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Horizontal Integration
2-29
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Diversification Growth
Diversification Growth
• Diversification growth makes sense when
good opportunities exist outside the
present businesses
Concentric
Strategy
New products having technological or
marketing synergies with existing product
lines (Compact Disc+ Laser Disk)
Through appealing to a different group
of customers
Horizontal
Strategy
Unrelated new products that requires a
different manufacturing process (DVD
Disc + Plastic Disc)
Through appealing to current customers
Conglomerate
Strategy
New businesses having no relationships
(DVD Disc + Application software)
Appealing to any customer groups
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Downsizing and Divesting Older
Businesses
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Organization and Organizational
Culture
• Carefully prune, harvest, or divest the tired old
businesses to release needed resources for
other uses and reduce costs
• A company‘s org consists of its structures, policies,
& corporate culture, all of which can become
dysfunctional in a rapidly changing business envt.
Strategic planning is
done within the context of
a company‘s structures,
policies, & corporate
culture
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Corporate Culture
Marketing Innovation
… is the shared experiences, stories, beliefs,
& norms that characterize an org
• MKT innovation is crucial
(BlackBerry)
– MKT innovation is fostered by
3 unrepresented groups
• A customer-centric
culture can affect all
aspects of an org
– Challenge company orthodoxy
& stimulate new ideas
• Very difficult to change
corporate culture
• Develop strategy by choosing
the firm‘s view of the future
• A viable corporate culture
is the key to success
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– Make scenario analysis by
asking ―What if…‖
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Planning Marketing: Partnering to
Planning Marketing: Partnering to
Build Customer Relationships (1)
Build Customer Relationships (1)
• Define MKT‘s role in SP & how MKT works
with its partners to create & deliver CV
• Once the unit‘s objectives are set, MKT
helps carry them out profitably
– Key ingredients in the marketer‘s success are:
customer engagement & value
1. MKT provides a guiding philosophy—the MKT
concept
– MKT is only a partner in attracting, engaging, &
growing customers
2. MKT provides inputs to strategic planners to
identify market opportunities & assess the firm‘s
potential
– Practice CRM & PRM
– Form an effective internal value chain that serves
customers
3. Within individual business units, MKT designs
strategies for reaching the unit‘s objectives
– Form a superior external value delivery network
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Planning Marketing: Partnering to
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MKT Strategy and the MKT Mix (2)
Build Customer Relationships (1)
The major activities
involved in managing a
customer-driven MKT
strategy & the MKT mix
• Value chain is the series of internal depts.
that carry out value-creating activities to
design, produce, market, deliver, & support a
firm‘s products
At the core,
MKT is all about
creating CV &
profitable
customer
relationships
MKT strategy involves 2
key questions:
• Value delivery network is a network
composed of the company, suppliers,
distributors, &, customers who partner with
each other to improve the performance of the
entire system in delivering CV
• Which customers will we
serve (S & T)? and
• How will we create value for
them (D & P)?
Then the company designs
a MKT program that
delivers the intended value
to targeted consumers.
To find the best MKT strategy & mix, the
company engages in MKT analysis,
planning, implementation, & control
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Through these activities, the
company watches & adapts to the
actors & forces in the MKT envt.
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MKT Strategy and the MKT Mix (2)
MKT Strategy and the MKT Mix (2)
• MKT strategy is the MKT logic by which the
company hopes to create CV & achieve
profitable customer relationships
• Customer value–driven MKT strategy
– Market segmentation
– Market targeting
– Positioning
• MKT mix is the set of controllable, tactical MKT
tools the firm uses to implement its MKT
strategy
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– Market positioning
• Developing an integrated MKT mix
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Managing the MKT Effort & MKT
Return on Investment (3)
Developing an Integrated MKT Mix
How
marketers
manage those
strategies &
plans— how
they
implement
MKT
strategies &
programs &
evaluate the
results
Developing
companywide &
MKT
strategies
& plans
Fig: Managing Marketing: Analysis,
Planning, Implementation, & Control
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Marketing Analysis
External
Conduct a SWOT
analysis— a
formal framework
for identifying &
framing orgl.
growth
opportunities
Internal
Favorable
Unfavorable
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Section
Purpose
Executive
summary
Presents a brief summary of the main goals and recommendations of the
plan for management review, helping top management find the plan‘s major
points quickly.
Current MKT Describes the target market & the company‘s position in it, including info
about the market, product performance, competition, & distribution.
situation
Internal
limitations that
may interfere
with a company‘s
ability to achieve
its objectives
Current and
External factors emerging external
that the company factors that may
may be able to
challenge a
exploit to its
company‘s
advantage
performance
Ts & Os
analysis
Assesses major threats & opportunities that the product might face, helping
MGT to anticipate important positive or negative developments
Objectives &
issues
States the MKT objectives that the company would like to attain during the
plan‘s term and discusses key issues that will affect their attainment.
MKT
strategy
Outlines the broad MKT logic by which the business unit hopes to engage
customers, create customer value, & build customer relationships.
Action
program
Spells out how MKT strategies will be turned into specific action programs
that answer the following questions: What will be done? When will it be
done? Who will do it? How much will it cost?
Budgets
Details a supporting MKT budget that is essentially a projected profit-andloss statement.
Controls
Outlines the controls that are used to monitor progress, allow MGT to review
implementation results, & spot products that are not meeting their goals.
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Measuring and Managing MKT
Return on Investment
Marketing Control
• Measuring & evaluating the results of MKT
strategies & plans and taking corrective
action to ensure that the objectives are
achieved
• MKT managers must ensure that their MKT
dollars are being well spent
• MKT ROI is the net return from a MKT
investment divided by the costs of the MKT
investment
– Operating control involves checking ongoing
performance against the annual plan & taking
corrective action when necessary
– MKT ROI can be difficult to measure
– In measuring financial ROI, both the R & the I are
uniformly measured in dollars
– Strategic control involves looking at whether the
company‘s basic strategies are well matched to its
opportunities
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Marketing Planning
SW
OT
Internal
capabilities that
may help a
company reach
its objectives
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Measuring and Managing MKT
Return on Investment
Marketing Debate
1. What good is a mission statement?
2. What implications do Porter‘s value chain
and the holistic MKT orientation model have
for MKT planning?
3. Take a position:
(a) Mission statements are critical to a successful
MKT org.
(b) Mission statements rarely provide useful
marketing value.
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