CHAPTER 4
Market-Oriented
Strategic Planning
PERSPECTIVES OF THE
FIRM
 Objective of the firm is to:
 Maximize profits - Economist
 Maximize shareholder value – Financial type
 Create customer-satisfying value at a profit Marketing
 Balance the interest of shareholders,
customers, employees, suppliers, and the
community – Management type.
 These perspectives shape the strategic
planning process within the firm.
THE FIRM AS A SYSTEM
The following are performed:
Coordination, integration, Mutual
Purpose, An Objective
Objective of superior customer value at
reduced cost provides guidance and
direction
Market realities drive the firm
MARKET ORIENTATION
There are three behavioral components:
Customer Orientation
Competitor Orientation
Inter-functional Coordination
There are two Decision Criteria:
Long-Term Focus
Profitability
STRATEGIC PLANNING
 Developing a game plan for achieving longrun objectives based upon existing
opportunities and resources.
 Strategy should ensure long-run survival and
growth
 The aim of strategic planning is to develop a
Sustainable Competitive Advantage (Low
Cost, Focus, Differentiation, Preemptive
Move, Synergy).
Porter’s Generic Competitive Strategies
Porter’s Competitive
Strategies
Cost Leadership:
– Low-cost competitive strategy
– Aimed at broad mass market
– Aggressive construction of efficientscale facilities
– Cost reductions
– Cost minimization
Porter’s Competitive
Strategies
Differentiation:
– Broad mass market
– Unique product or service
– Charge premiums
– Lower customer sensitivity to price
Porter’s Competitive
Strategies
Cost focus:
– Low cost competitive strategy
– Focus on particular buyer group or
market
– Niche focused
– Seek cost advantage in target
market
Porter’s Competitive
Strategies
Differentiation focus:
– Focus on particular group or geographic
market
– Seek differentiation in targeted market
segment
– Serve special needs of narrow target
market
Stuck in the middle:
– No competitive advantage
– Below-average performance
STRATEGIC MARKET
PLANNING
 With Strategic Planning There Are THREE
Key Questions:
 1.) Where is the firm now?
 2.) Where does the firm want to be in a
specified time-frame?
 3.) What is the best way to get there (what
actions should we take and what are the risks
and rewards?
 This process provides ideas, enable managers
to evaluate opportunities, develop and
implement plans, and monitor results.
Basic Model of
Strategic Management
FOUR BASIC ELEMENTS
STRATEGIC PLANNING
PROCESS
Plan (Corporate, Business, Product)
Implement (Organize, Implement)
Control (Measure results Analyze, Take
Corrective Actions).
Mission >>> Objectives & Goals >>>
Portfolio Plan >>> Business Plan
STRATEGIC PLANNING
PROCESS
 Mission – clear statement providing a sense of
opportunity and direction in terms of
customer needs, groups and technologies
 Objectives & Goals – Actionable quantitative
and realistic restatement of the mission
 Portfolio Plan – Analysis of each business unit
of analysis in terms of profitability, market
share, attractiveness or other relevant
measures (BCG Growth/Share Matrix, GE
Multifactor Matrix).
STRATEGIC PLANNING
GAP
 Kotler identifies the firm’s Strategic Planning
Gap as the difference between the actual and
desired or expect sales.
 For change to occur, the gap must be large
enough to move the firm to strategic action.
 Once the gap is recognized management can
move to fill the gap (Intensive Growth – action within
present product-market scope, Integrative Growth
opportunities within firm’s market system, Diversification
opportunities outside firm’s marketing system)
GROWTH STRATEGIES
 Market Penetration (Present markets &
Products)
 Product Development - (Present Markets, New
Products)
 Market Development - (Present Products,
New Markets)
 Diversification (New Products, New Markets)
 Vertical Integration