Slides for Chapter 2


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Slides for Chapter 2

  1. 1. Chapter 2 Strategic Planning and the Marketing Process May 24, 2001
  2. 2. Strategic Planning <ul><li>The role of strategic management is to harmonize the activities and functions of the various subsystems within the organization to meet the needs imposed by the organization’s environment. </li></ul><ul><li>The goal of the strategy making process is to identify core competencies and use them to gain competitive advantage. </li></ul><ul><li>Strategy represents the game plan for the organization, providing direction for the entire organization and making use of the competencies and opportunities for each unit </li></ul>
  3. 3. Marketing and Strategy <ul><li>Marketing is a core part of the business’s overall strategy. Since the marketing function is responsible for the scanning of the environment and representing customer interests in the firm. </li></ul><ul><li>A strategic organization will try to achieve a market orientation - a structure and culture that embodies the marketing concept. Marketing strategy is a major part of overall strategy </li></ul>
  4. 4. Situation Analysis <ul><li>Key to the strategy process is the situation analysis, which is an examination of the internal and external environments to determine: </li></ul><ul><ul><li>Strengths and Weaknesses internally </li></ul></ul><ul><ul><li>Opportunities and Threats externally </li></ul></ul><ul><li>Results of the SWOT analysis will help identify organizational goals </li></ul>
  5. 5. Elements of Strategy <ul><li>MOST - Mission, Objectives (Goals), Strategy, Tactics </li></ul><ul><li>Mission is the stated vision of the company for the future. It represents the statement of the firm’s ultimate goal - what it wants to be and do. </li></ul><ul><ul><li>Market oriented (not product oriented - avoid myopia) </li></ul></ul><ul><ul><li>Realistic </li></ul></ul><ul><ul><li>Specific </li></ul></ul><ul><ul><li>Suit the environment & relate to core competencies </li></ul></ul>
  6. 6. Elements of Strategy (2) <ul><li>Objectives and Goals </li></ul><ul><ul><li>Goals are generalized targets for the future </li></ul></ul><ul><ul><li>Objectives are specific, short-term and measurable targets over a time period </li></ul></ul><ul><li>Strategies - specific plans of action to meet objectives </li></ul><ul><ul><li>Corporate level - growth, stability or retrenchment </li></ul></ul><ul><ul><li>Portfolio level - identify strategic business units that have unique goals/objectives, markets, products, product, competitors </li></ul></ul>
  7. 7. Elements of Strategy (3) <ul><li>Portfolio Analysis: </li></ul><ul><ul><li>Corporate-level identification of SBUs and integration of them in a way that provides competitive advantage </li></ul></ul><ul><li>Business - level strategies: </li></ul><ul><ul><li>Each SBU needs to generate its own objectives and strategies based on an analysis of its environment </li></ul></ul>
  8. 8. Methods of Analyzing BSUs <ul><li>BCG Matrix - takes into account current product mix, as well as the market growth and firm market share to define appropriate strategic actions. </li></ul><ul><li>GE Business Screen - looks at strength of business unit as well as industry attractiveness. </li></ul><ul><li>Market Expansion Grid - looks not just at current markets/products, but expansion possibilities as well </li></ul>
  9. 9. BCG Matrix
  10. 10. GE Business Screen Build Hold Harvest/Divest
  11. 11. Market Expansion Grid
  12. 12. Strategies to Meet SBU Objectives <ul><li>Porter’s Business-Level Strategies </li></ul><ul><li>Once an analysis of the SBU’s competitive position has been done and a broad objective defined, the 3 following options, and combinations of them, can be followed: </li></ul><ul><ul><li>Cost Leadership - compete on price </li></ul></ul><ul><ul><li>Differentiation - compete on quality or uniqueness of the product </li></ul></ul><ul><ul><li>Focus - compete by targeting a specific market niche </li></ul></ul>
  13. 13. Tactics - The Marketing Process <ul><li>Analysis of Market Opportunities through strategic planning </li></ul><ul><li>Identification and Selection of Target Markets </li></ul><ul><li>Manipulating the Marketing Mix </li></ul><ul><li>Implementation and Evaluation of tactics </li></ul>
  14. 14. Segmentation <ul><li>Involves dividing up the total market into a number of fairly homogeneous groups based on one or more key factors that affect buying behaviour, such as: </li></ul><ul><ul><li>demographics, psychographics, usage, benefits of the product, location, etc. </li></ul></ul><ul><ul><li>Can be very difficult to define, and relates directly to the product or brand in question </li></ul></ul>
  15. 15. Targeting <ul><li>Involves identifying the market segment that can best be serviced given the firm’s overall goals and core competencies </li></ul><ul><li>Involves an assessment of the attractiveness of the various segments to decide which ones to target </li></ul>
  16. 16. Positioning <ul><li>Involves finding a niche for the product or brand in the mind of the consumer, based on a number of factors such as: </li></ul><ul><ul><li>use, attributes delivered, quality, price, size </li></ul></ul><ul><li>Is a relative comparison to competitor products/brands </li></ul><ul><li>Can be depicted with a perceptual map with 2 dimensions </li></ul>
  17. 17. Market Position <ul><li>Firm must define its market position relative to other firms, which will affect how it deals with competitors: </li></ul><ul><ul><li>Market leader - sets standards and fights to stay on top </li></ul></ul><ul><ul><li>Market Challenger - tries to overtake the market leader </li></ul></ul><ul><ul><li>Market Follower - Reactive, content to take a smaller role </li></ul></ul><ul><ul><li>Market Nicher - focuses only on a small segment, ignores the rest </li></ul></ul>
  18. 18. Manipulating the Marketing Mix <ul><li>Once the strategies have been defined, the key elements within the organization’s control in devising tactics are the four elements of the marketing mix. They are used to influence demand and compete in accordance with business level strategies: </li></ul><ul><ul><li>Product </li></ul></ul><ul><ul><li>Price </li></ul></ul><ul><ul><li>Place </li></ul></ul><ul><ul><li>Promotion </li></ul></ul>
  19. 19. Evaluating the Marketing Effort <ul><li>It is key that the implementation of tactics through the marketing mix be evaluated so that the firm knows if its strategy was appropriate and if the actions taken to meet that strategy were effective. </li></ul><ul><li>Have the success criteria been met? If not, why? What action could be taken to remedy the performance gap? </li></ul>