Chapter 4
Winning Markets
Through Strategic
Planning,
Implementation,
and Control
PowerPoint by Yu Hongyan
Business School of Jilin University
Prof.YU Hongyan JLU
Strategic-Planning, Implementation, and Control Process
Planning
Corporate
planning
Implementation
Organizing
Division
planning
Business
planning
Product
planning
Control
Measuring
results
Diagnosing
results
Implementing
Taking
corrective
action
Objectives
1. CORPORATE AND DIVISION
STRATEGIC PLANNING
2. BUSINESS STRATEGY PLANNING
3. THE MARKETING PROCESS
4. MANAGING MARKETING PROCESS
Prof.YU Hongyan JLU
1. CORPORATE AND DIVISION
STRATEGIC PLANNING
1.1 Defining the Corporate Mission
1.2 Establishing Strategic Business Units
(SBUs)
1.3 Assigning Resources to SBUs
1.4 Planning New Businesses, Downsizing
Older Businesses
Prof.YU Hongyan JLU
1. CORPORATE AND DIVISION
STRATEGIC PLANNING (cont’d)

1.1Corporate Mission

Peter Drucker





What is our business?
Who is our customer?
What is of value to the customer?
What will our business be?
What should our business be?
Prof.YU Hongyan JLU
1. CORPORATE AND DIVISION
STRATEGIC PLANNING (cont’d)

1.1 Corporate Mission

Good Corporate Mission
 Limited number of goals
 Stress major policies & values
 Define competitive scopes
Prof.YU Hongyan JLU
For more than 50 years, Our Credo has
helped us in fulfilling our responsibilities
to customers, employees, communities
and stockholders.
The mission of Southwest Airlines is
dedication to the highest quality of
Customer Service delivered with a
sense of warmth, friendliness,
individual pride, and Company Spirit.
To Our Employees…..
1. CORPORATE AND DIVISION
STRATEGIC PLANNING (cont’d)
PepsiCo’s Mission Statement

“PepsiCo’s overall mission is to increase the value of our
shareholders’ investment. We do this through sales growth,
cost controls and wise investment of resources. We believe
our commercial success depends upon offering quality and
value to our consumers and customers; providing products
that are safe, wholesome, economically efficient and
environmentally sound; and providing a fair return to our
investors while adhering to the highest standards of integrity.”
http:\\www.pepsico.com
Prof.YU Hongyan JLU
1. CORPORATE AND DIVISION
STRATEGIC PLANNING (cont’d)

Motorola


To honorably serve the needs of the community by
providing products and services of superior quality
at a fair price to our customers;
to do this so as to earn an adequate profit which is
required for the total enterprise to grows;and by so
doing provide the opportunity for our employees
and shareholders to achieve their reasonable
personal objectives
Prof.YU Hongyan JLU
Discussion Scenario
Critique the following hypothetical mission
statement.
“The overall mission of KDT is to provide
cutting edge Internet services to consumer and
business clients, while increasing the value of
our shareholder’s investment.”
中国建设银行,建设美好生活
中国移动:沟通从心开始
Prof.YU Hongyan JLU
1. CORPORATE AND DIVISION
STRATEGIC PLANNING (cont’d)
1.2 Establish Strategic business units (SBUs)
 A business can be defined in terms of three
dimensions



Customer group
Customer needs
Technology
Prof.YU Hongyan JLU
Derek Abell(1980) Defining the Business based on customer group,
customer needs and technology. It is customer satisfying process not a
goods producing process
Customer need
空调
通风
照明
供暖
蜡烛
白炽灯
日光灯
Technology
电
视
制
作
室
家
庭
工
厂
办
公
室
Customer
group
1. CORPORATE AND DIVISION
STRATEGIC PLANNING (cont’d)
Company
Product Definition
Market Definition
Missouri-pacific
railroad
We run a railroad
We are a people and goods
mover
Xerox
We make a copying
equipment
We help improve office
productivity
Standard Oil
We sell gasoline
We supply energy
Columbia picture
We make movie
We market entrainment
Encyclopedia
Britannica
We sell encyclopedias
We distribute information
Carrier
We make air condition and
furnaces
We provide climate control in
the home
1. CORPORATE AND DIVISION
STRATEGIC PLANNING (cont’d)
1.2 Establish Strategic business units (SBUs)
 SBUs share three characteristics:



Single business or collection of businesses
which can be managed separately
Has own set of competitors
Has manager responsible for strategic planning
and profits
Prof.YU Hongyan JLU
1. CORPORATE AND DIVISION
STRATEGIC PLANNING (cont’d)
1.3 Assigning Resources to SBUs
Philosophy
Common Tools
Profitability
Portfolio Matrix
$
Market Share
Prof.YU Hongyan JLU
1. CORPORATE AND DIVISION
STRATEGIC PLANNING (cont’d)
1.3 Assigning Resources to SBUs
The Boston Matrix




The Boston Matrix is a well known tool for the
marketing manager
It was developed by The Boston Consulting Group
(BCG)
It is an approach to product or business portfolio
planning
It has two controlling aspect namely relative market
share (meaning relative to your competition) and
market growth
Prof.YU Hongyan JLU
BCG Portfolio Matrix
Relative market share
high
10
low
Market Growth Rate
high
High growth
Market leaders
Require cash
1
low
High growth
Low market share
Need cash
Poor profit margins
$
Low growth
High market share
High cash flow
Low growth
Low market share
Minimal cash flow
Discussion Scenario
Relative market share
HIGH
LOW
Market growth rate
HIGH
手提电脑
(STAR)
PC
(CASH COW)
LOW
Palmtop掌上型
电脑
(PROBLEM
CHILD)
Mainframe主机
Computer
(DOG)
Market Growth Rate
The Boston Consulting Group’s
Growth-Share Matrix
20%18%16%14%12%10%8%6%4%2%0
Stars
4
5
Question marks
3
?2
?
1
Dogs
Cash cow
8
6
10x
7
4x
2x 1.5x 1x
.5x .4x .3x .2x .1x
Relative Market Share
1. CORPORATE AND DIVISION
STRATEGIC PLANNING (cont’d)
1.3 Assigning Resources to SBUs

The Boston Matrix
Prof.YU Hongyan JLU
1. CORPORATE AND DIVISION
STRATEGIC PLANNING (cont’d)
1.3 Assigning Resources to SBUs

Life cycle
Prof.YU Hongyan JLU
1. CORPORATE AND DIVISION
STRATEGIC PLANNING (cont’d)
1.3 Assigning Resources to SBUs
Build
Aim is to increase market share, Provide financial
resources if SBU (Problem Child) has potential to be a
Star.
Hold
Aim is to preserve market share if SBU is a successful
Cash Cow. Use cash flow for other SBUs.
Harvest
Aim is to Increase short-term cash return. Appropriate
for all SBUs except Stars.
Divest剥夺
Get rid of SBUs with low shares in
low-growth markets.appropriate for dog and question
Prof.YU Hongyan JLU
Market Attractiveness Matrix (GE)
BUSINESS STRENGH
HIGH
MEDIUM
MEDIUM
WEAK
High Attractiveness
Medium Attractiveness
Low Attractiveness
LOW
MARKET ATTRACTIVENESS
STRONG
MARKET ATTRACTIVENESS
Low Medium High
1. CORPORATE AND DIVISION
STRATEGIC PLANNING (cont’d)
Strong
BUSINESS STRENGTH
Medium
5.00
5.00
3.67
2.33
Weak
1.00
Joints
Aerospace
fittings
Hydraulic
pumps
3.67
Clutches
2.33
Flexible
diaphragms
Fuel
pumps
Relief
valve
1.00
Invest/grow
Selectivity/earnings
Harvest/divest
Strong
Protect position
high
Invest to grow of
maximum digestible rate
Concentrate effort on
maintaining strength
Build selectively
Medium
Invest heavily in most
attractive segments
Build up ability to
counter competition
Emphasize profitability
by raising productivity
Protect and refocus
Low
Manage for current
earnings
Concentrate on
attractive segments
Defend strengths
Medium
Invest to build
Challenge for leadership
Build selectively on
strengths
Reinforce vulnerable
areas
Selectively/manage
Protect existing program
Concentrate investments
in segments where
profitability's good and
risks are relatively low
Manage for earnings
Protect position in most
profitable segments
Upgrade product line
Minimize investment
Weak
Build selectively
Specialize around limited
strengths
Seek ways to overcome
weaknesses
Withdraw if indications
of sustainable growth
Limited expansion or
harvest
Look for ways to expand
without high
risk;otherwise, minimize
investment and
rationalize operations
Divest
Sell at time that will
maximize cash value
Cut fixed costs and avoid
investment meanwhile
1. CORPORATE AND DIVISION
STRATEGIC PLANNING (cont’d)
1.3 Assigning Resources to SBUs

Attributes of Market Attractiveness
High profitability
Rapid growth
Lack of government regulation
Insensitivity to price increase
Lack of competition
Availability of technology
Prof.YU Hongyan JLU
1. CORPORATE AND DIVISION
STRATEGIC PLANNING (cont’d)
1.3 Assigning Resources to SBUs

Business Strength Market share






Share growth
Product quality
Brand reputation
Distribution network
Promotional effectiveness
Productive capacity
Prof.YU Hongyan JLU
1. CORPORATE AND DIVISION
STRATEGIC PLANNING (cont’d)
1.3 Assigning Resources to SBUs

Critique of Portfolio Models






+help managers think more strategically
+understand the economics of their business
better
+improve the quality of their plans
+Improve communication between B&C
+Pinpoint the information gap
+Eliminate weaker business and strengthen
Prof.YU Hongyan JLU
1. CORPORATE AND DIVISION
STRATEGIC PLANNING (cont’d)
1.3 Assigning Resources to SBUs

Portfolio models must be used cautiously


-too much emphasis on market share growth
-sensitive to the rating and weights
Prof.YU Hongyan JLU
1. CORPORATE AND DIVISION
STRATEGIC PLANNING (cont’d)

1.4 Planning New Businesses and
Downsizing Old Businesses



Identify opportunities to achieve further growth
within the company current business –intensive
growth opportunity
Build business that are related to the company
current business-integrative growth
Add attractive business that are unrelated to
the company current business-diversification
growth
Prof.YU Hongyan JLU
The Strategic-Planning Gap
Desired
sales
Diversification growth
Strategicplanning
gap
Sales
Integrative growth
Intensive growth
Current
portfolio
0
5
Time (years)
10
Three Intensive Growth Strategies:
Ansoff’s Product/Market Expansion Grid
Existing
products
Existing
markets
1. Market
penetration
New
markets
2. Market
development
New
products
3. Product
development
4. Diversification
Review-
1. CORPORATE AND DIVISION STRATEGIC PLANNING
1.1 Defining the Corporate Mission
1.2 Establishing Strategic Business Units
(SBUs)
1.3 Assigning Resources to SBUs
1.4 Planning New Businesses, Downsizing
Older Businesses
Prof.YU Hongyan JLU
2. BUSINESS STRATEGIC-PLANNING
Figure 4-4:
The Business Strategic-Planning Process
Prof.YU Hongyan JLU
2. BUSINESS STRATEGIC-PLANNING
(cont’d)

2.1 Business Mission

Prof.YU Hongyan JLU
2. BUSINESS STRATEGIC-PLANNING
(cont’d)
2.2 SWOT Analysis


Opportunities and
threats stemming
from the external
environment
Internal strengths and
weaknesses

Monitor key forces for
trends


Macro environment,
and microenvironment
For each trend,
conduct an MOA Marketing
Opportunity Analysis
Prof.YU Hongyan JLU
Opportunity Matrix
Attractiveness
Success Probability
High
Low
High
1
2
Low
3
4
Opportunities
1. Company develops a more
powerful lighting system
2. Company develops a device
for measuring the energy
efficiency of any lighting
system
3. Company develops a device
for measuring illumination
level
4. Company develops a
software program to teach
lighting fundamentals to TV
studio personnel
Threat Matrix
Seriousness
Probability of Occurrence
High
Low
High
1
2
Low
3
4
Threats
1. Competitor develops a
superior lighting system
2. Major prolonged
economic depression
3. Higher costs
4. Legislation to reduce
number of TV studio
licenses
2. BUSINESS STRATEGIC-PLANNING
(cont’d)
2.2 SWOT Analysis


Opportunities and
threats stemming
from the external
environment
Internal strengths and
weaknesses



Brand awareness,
image, reputation
Distribution, pricing,
customer loyalty,
product benefits
Finance, R&D,
manufacturing
Prof.YU Hongyan JLU
进行优劣势分析的检查表
item
performance
weight
特强 稍强 中间 稍弱 特弱 high middle low
营销
1，企业声誉
2，市场份额
3，顾客满意
4，顾客维持
5，产品质量
6，服务质量
7，定价有效性
8，分销有效性
9，促销有效性
10，销售人员有效性
11，创新效果
12，地理覆盖范围
（续〕
项目
财务
13，资金成本或有效性
14，现金流
15，财务稳健性
制造
16，设备
17，规模经济性
18，生产能力
19，技能和奉献型工人
20，准时生产交货能力
21，技术和制造工艺
组织
22，远见卓识的领导
23，能奉献的员工
24，创业导向
25，柔性或反应能力
weight
绩效
特强 稍强 中间 稍弱 特弱 高 中 低
2. BUSINESS STRATEGIC-PLANNING
(cont’d)
2.3 Goal Formulation
Effective Goals:
Must be Realistic
Must be Consistent
Must be Hierarchical
Must be Stated Quantitatively
Prof.YU Hongyan JLU
Trade-off
2. BUSINESS STRATEGIC-PLANNING
(cont’d)
Discussion Scenario
Effective Goals:
Critique the following objectives:
Our objectives are to . . .
1) better serve customers.
2) be the best we can be.
3) increase market share.
4) maximize shareholder wealth.
Prof.YU Hongyan JLU
2. BUSINESS STRATEGIC-PLANNING
(cont’d)

2.3Goal Formulation
“Our objective is to increase
market share by 40% and to
obtain customer satisfaction
ratings of at least 90% in
2001.”
Prof.YU Hongyan JLU
2. BUSINESS STRATEGIC-PLANNING
(cont’d)

2.4 Strategy Formulation
A plan of action resulting from
strategy or intended to accomplish
a specific goal
Differentiation
Focus
Porter’s Generic
Strategies
Overall cost leadership
Prof.YU Hongyan JLU
2. BUSINESS STRATEGIC-PLANNING
(cont’d)

2.5 Program formulation and program
implementation involves:



Developing supporting programs
Estimating implementation costs
Carefully managing the details so great
strategy isn’t ruined by poor
implementation
Prof.YU Hongyan JLU
2. BUSINESS STRATEGIC-PLANNING
(cont’d)

2.6 Feedback and control



Do the right thing(effectiveness)
To do things right(efficiency)
Do the right thing than to do thing right
首先要做对,然后是做好
Prof.YU Hongyan JLU
3. THE MARKETING PROCESS

3.1 The Value-Delivery Sequence


Traditional physical process sequence
Value creation and delivery sequence
Prof.YU Hongyan JLU
3.1 The Value-Delivery Process
(a) Traditional physical process sequence
Make the product
Design Procure Make
product
Sell the product
Price Sell Advertise/
promote Distribute Service
(b) Value creation & delivery sequence
Choose the Value Provide the Value Communicate the Value
Strategic marketing
Tactical marketing
3. THE MARKETING PROCESS (cont’d)
Figure 4-5: Two Views of the Value-Delivery Process
Prof.YU Hongyan JLU
3. THE MARKETING PROCESS
(cont’d)

3.2 Steps in the Marketing Process:
Analyzing Marketing Opportunities
Developing Marketing Strategies STP
Planning Marketing Programs 4ps
Managing the Marketing Effort
Prof.YU Hongyan JLU
Factors Influencing Company
Marketing Marketing Strategy
intermediaries
Demographic/
economic
environment
Technical/
physical
environment
Product
Suppliers
Place
Target Price
customers
Publics
Promotion
Political/
legal
environment
Social/
cultural
environment
Competitors
3. THE MARKETING PROCESS (cont’d)
3.3 Product-Marketing Plan Contents




Executive summary and
Table of Contents
Current situation
Opportunity and issue
analysis
Objectives




Marketing strategy
Action programs
Financial projections
Controls
It is very important
Prof.YU Hongyan JLU
4. Managing the Marketing Process
4.1 Organization of the marketing
department
4.2 Building a company wide marketing
orientation
4.3 Marketing implementation
4.4 Evaluating and controlling the
marketing process
Prof.YU Hongyan JLU

We don’t learn this parts because it is
too much for us
Prof.YU Hongyan JLU
Managing the Marketing Process
1.Methods of Organizing the Marketing Department
Function
Global Aspects
Geographic Area
Products or Brands
Corporate Divisions
Customers or Markets
Prof.YU Hongyan JLU

Functional
organization



Geographic
organization
Marketing vice
president
Sale manager






Prof.YU Hongyan JLU
National sale manager
Regional sale
Zone sale
Area market specialist
District
Sale
2.Building a Company wide
Marketing Orientation Requires





Commitment from top management
Training programs; employee
empowerment
Recognitions and rewards programs
Modern marketing planning system
Process-outcome focus
Prof.YU Hongyan JLU
3.Marketing Implementation



Strategy address what and why of
marketing activities
Implementation addresses the who,
where, when and how
Top management’s strategic decision to
harvest a product must be translated
into specific actions and assignment
Prof.YU Hongyan JLU

Successfully implementing programs
requires four sets of skills:




Diagnostic skills
Identification of company level
Implementation skills
Evaluation skills
Prof.YU Hongyan JLU
4.EVALUATING AND CONTROLLING THE
MARKETING PROCESS




Annual-plan control
Profitability control
Efficiency control
Strategic control
Prof.YU Hongyan JLU

The heart of annual control




Sets monthly or quarterly goals
Monitors the company’s marketplace
performance
Determines the causes of serious
performance deviations
Takes corrective action to close the gaps
between goals and performance
Prof.YU Hongyan JLU
Evaluating and controlling the
marketing process
Types of Control




Annual plan
Profitability
Efficiency
Strategic


Responsibility of top
and middle
management
Examines whether
planned results are
achieved
Prof.YU Hongyan JLU
Evaluating Annual Performance
Marketing expenseto-sales analysis
Financial
analysis
Market share
analysis
Performance
Analysis
Tools
Sales analysis
Prof.YU Hongyan JLU
Market-based
scorecard analysis
Sales Analysis

Measure and evaluate actual sales in
relation to goals



Sales-variance analysis
Microsales analysis
The point is want factors contributed to
a failure to meet sales goals
Prof.YU Hongyan JLU
Market-share Analysis


Why need market share analysis
Need track its market share




Total market share(total market)
Served market share(willing to buy the product)
Relative market share(the largest competitor)
Customer penetration, customer loyalty,
customer selectivity, and price selectivity
Prof.YU Hongyan JLU
Marketing expense-to-sales
Analysis



Sure the company is not overspending
to achieve sales goals
Minor fluctuations
Major fluctuations
Prof.YU Hongyan JLU
Financial Analysis
Assets: cash, accounts receivable,
inventory, and plan and equipment
Prof.YU Hongyan JLU
Market-based Scorecard Analysis

Customer-performance scorecard


New customer, dissatisfied customer, lost
customers target market awareness, target
market preference, relative product quality
and relative service quality
Stakeholder performance scorecard

Employees, suppliers, banks, distributors,
retailers and stokeholds
Prof.YU Hongyan JLU
Managing The Marketing Process
Types of Control




Annual plan
Profitability
Efficiency
Strategic


Responsibility of
marketing controller
Examines where the
company is making and
losing money



Prof.YU Hongyan JLU
Functional expense for
each activity
Functional expense for
each channel
Profit and loss statement
Managing The Marketing Process
Types of Control




Annual plan
Profitability
Efficiency
Strategic


Responsibility of line
& staff and / or
marketing controller
Evaluates and
attempts to improve
spending efficiency
of marketing
expenditures
Prof.YU Hongyan JLU
Managing The Marketing Process
Types of Control




Annual plan
Profitability
Efficiency
Strategic


Responsibility of top
management and
marketing auditor
Examines whether
company is pursuing
its best
opportunities
Prof.YU Hongyan JLU
Managing The Marketing Process

Strategic controls should be conducted
periodically via:



Marketing-effectiveness reviews
Marketing audits
Additional reviews to consider:


Marketing excellence review
Ethical and social responsibility review
Prof.YU Hongyan JLU
Review
CORPORATE AND DIVISION STRATEGIC
PLANNING
1.
1.
2.
3.
4.
Mission
SBU
SBU resource
Growth and downsize
2. BUSINESS STRATEGY PLANNING

Mission, SWOT, Goal, strategy, program, implementation
and control
3. THE MARKETING PROCESS



Value delivery sequence
Marketing process
Product planning
Prof.YU Hongyan JLU