DEVELOPING MARKETING STRATEGIES & PLANS Company and Marketing Strategy: Partnering to Build Customer Relationships

Planning The process of anticipating future events and determining strategies to achieve organizational objectives in the future. Strategic Planning The process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities The Nature of Strategic Planning

Planning

The process of anticipating future events and determining strategies to achieve organizational objectives in the future.

Strategic Planning

The process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities

Strategic-Planning, Implementation, and Control Process Planning Measuring results Diagnosing results Taking corrective action Implementation Corporate planning Division planning Business planning Product planning Organizing Implementing Control

Four Steps of Organizational Strategic Plan Defining the company mission Setting company objectives and goals Designing the business portfolio and Planning the marketing and other functional activities. Strategic planning covers the entire activities of the organization, including all of the strategic business units (SBUs) and each functional area. Developing functional strategies and plans is the fourth step in the strategic planning process. One technique for identifying opportunities is to seek strategic windows. A strategic window is the identification of an opportunity for a limited period in the future and managing the organization's resources so that there is a fit between the key market needs and the ability of the organization to meet those needs at an optimum level.

Defining the company mission

Setting company objectives and goals

Designing the business portfolio and

Planning the marketing and other functional activities.

Strategic planning covers the entire activities of the organization, including all of the strategic business units (SBUs) and each functional area.

Developing functional strategies and plans is the fourth step in the strategic planning process. One technique for identifying opportunities is to seek strategic windows.

A strategic window is the identification of an opportunity for a limited period in the future and managing the organization's resources so that there is a fit between the key market needs and the ability of the organization to meet those needs at an optimum level.

Strategic Business Units (SBUs) Individual units within the firm that operate like separate businesses, with each having its own mission, business objectives, resources, managers, and competitors.

(SBUs) Individual units within the firm that operate like separate businesses, with each having its own mission, business objectives, resources, managers, and competitors.

Characteristics of SBUs It is a single business or collection of related businesses It has its own set of competitors It has a leader responsible for: Strategic planning Profitability Efficiency

It is a single business or collection of related businesses

It has its own set of competitors

It has a leader responsible for:

Strategic planning

Profitability

Efficiency

Planning at Different Management Levels Strategic Planning Corporate Level Planning Strategic Business Unit(SBU) Planning planning done by top level corporate managers • Define corporate visions • Set corporate goals • Establish the business portfolio Planning done by top level SBU managers • Define the business mission • Evaluate the environment (SWOT analysis) » State business objectives • Develop growth strategies Tactical Planning Planning done by Functional Area Managers; Human Resources Finance Operations Accounting Marketing * Evaluate the marketing environment « Set marketing objectives « Develop marketing strategies to achieve corporate objectives Operational Planning Planning by Supervisory Managers: manager manager • Develop action plans to implement tactical plans

Strategic Planning Corporate Level Planning Strategic Business Unit(SBU) Planning

planning done by top level corporate managers

• Define corporate visions

• Set corporate goals

• Establish the business portfolio

Planning done by top level SBU managers

• Define the business mission

• Evaluate the environment (SWOT analysis)

» State business objectives

• Develop growth strategies

Tactical Planning

Planning done by Functional Area Managers; Human Resources Finance Operations Accounting Marketing

* Evaluate the marketing

environment « Set marketing

objectives « Develop marketing

strategies to achieve

corporate objectives

Operational Planning

Planning by Supervisory Managers: manager

manager

• Develop action plans to implement tactical plans

Three Levels of Planning Tactical (Functional) Planning : A decision process that concentrates on developing detailed plans for strategies and tactics for the short term that support an organization's long-term strategic plan. Accomplished by various functional areas of firm. Typically includes a broad 5-year plan to support strategic plan and a detailed annual plan Example: to gain 40% of a particular market with three new products during coming year Operational Planning: A decision process that focuses on developing detailed plans for day-to-day activities that carry out an organization's tactical plans. First-line managers focus on day-to-day execution of functional plans. Such planning includes detailed annual, semiannual, or quarterly plans Example: units of a product a salesperson needs to sell per month

Tactical (Functional) Planning : A decision process that concentrates on developing detailed plans for strategies and tactics for the short term that support an organization's long-term strategic plan. Accomplished by various functional areas of firm.

Typically includes a broad 5-year plan to support strategic plan and a detailed annual plan

Example: to gain 40% of a particular market with three new products during coming year

Operational Planning: A decision process that focuses on developing detailed plans for day-to-day activities that carry out an organization's tactical plans. First-line managers focus on day-to-day execution of functional plans.

Such planning includes detailed annual, semiannual, or quarterly plans

Example: units of a product a salesperson needs to sell per month

Three Levels of Planning Cross-Functional : An approach to tactical planning in which managers work together in developing tactical plans for each functional area in the firm so that each plan considers the objectives of the other areas.

Cross-Functional : An approach to tactical planning in which managers work together in developing tactical plans for each functional area in the firm so that each plan considers the objectives of the other areas.

The Value-Delivery Process (a) Traditional physical process sequence (b) Value creation & delivery sequence Sell the product Make the product Procure Design product Make Price Sell Advertise/ promote Distribute Service Choose the Value Provide the Value Tactical marketing Strategic marketing Communicate the Value

Strategic Planning at Co-operate Level To develop strategic plans, top-level corporate managers follow three steps: 1. They develop a mission or vision for the total corporation, 2. Establish the corporation's long-term goals or objectives, 3. Allocate resources to the different SBUs to maximize growth and profits.

To develop strategic plans, top-level corporate managers follow three steps: 1. They develop a mission or vision for the total corporation,

2. Establish the corporation's long-term goals or objectives,

3. Allocate resources to the different SBUs to maximize growth and profits.

Strategic Planning at Co-operate Level 1. Mission Statement : A formal statement in an organization's strategic plan that describes the overall purpose of the organization and what it intends to achieve in terms of its customers, products, and resources. The Quaker Oats Company: To meet the needs of consumers through innovative marketing and manufacturing of healthful, good-tasting products that contribute to a healthy lifestyle and consumer well-being around the world, yielding above-average returns over time for our shareholders, (www.quakeroats.com/about/goal.htm) Analysts use the term marketing myopia to describe firms that develop shortsighted visions

1. Mission Statement : A formal statement in an organization's strategic plan that describes the overall purpose of the organization and what it intends to achieve in terms of its customers, products, and resources. The Quaker Oats Company: To meet the needs of consumers through innovative marketing and manufacturing of healthful, good-tasting products that contribute to a healthy lifestyle and consumer well-being around the world, yielding above-average returns over time for our shareholders, (www.quakeroats.com/about/goal.htm)

Analysts use the term marketing myopia to describe firms that develop shortsighted visions

Market-Oriented Mission A mission statement asks.. What is our business? Who is the customer? What do consumers value? What should our business be? A mission statement should be: An “invisible hand” Neither too narrow nor too broad Fitting of market environment Based on distinctive competencies Motivating

A mission statement asks..

What is our business?

Who is the customer?

What do consumers value?

What should our business be?

A mission statement should be:

An “invisible hand”

Neither too narrow nor too broad

Fitting of market environment

Based on distinctive competencies

Motivating

Establishing Corporate Objectives: After constructing a mission statement, top manage­ment translates the corporation's mission into goals or objectives. These are specific accomplish­ments or outcomes that an organization hopes to achieve by a certain time. Organizational objectives are a direct outgrowth of the mission statement and broadly identify what the firm hopes to accomplish within the general time frame of the firm's long-range business plan. Planning for Growth: The Business Portfolio For companies with several different SBUs, strategic planning includes making decisions about how to best allocate resources among these businesses to ensure growth for the total organization. Each SBU has its own focus within the firm's overall strategic plan, and each has its own tar­get market and strategies for reaching its goals. Just like an independent business, each SBU is a separate profit center within a large corporation responsible for its own costs, revenues and profits. Strategic Planning at Co-operate Level

Establishing Corporate Objectives: After constructing a mission statement, top manage­ment translates the corporation's mission into goals or objectives. These are specific accomplish­ments or outcomes that an organization hopes to achieve by a certain time.

Organizational objectives are a direct outgrowth of the mission statement and broadly identify what the firm hopes to accomplish within the general time frame of the firm's long-range business plan.

Planning for Growth: The Business Portfolio For companies with several different SBUs, strategic planning includes making decisions about how to best allocate resources among these businesses to ensure growth for the total organization.

Each SBU has its own focus within the firm's overall strategic plan, and each has its own tar­get market and strategies for reaching its goals. Just like an independent business, each SBU is a separate profit center within a large corporation responsible for its own costs, revenues and profits.

Factors Influencing Company Marketing Strategy Target customers Competitors Marketing intermediaries Publics Suppliers Marketing information system Marketing planning system Marketing organization system Marketing organization and implementation Product Promotion Place Price Demographic/ economic environment Social/ cultural environment Technical/ physical environment Political/ legal environment

MARKETING PLANNING Company and Marketing Strategy: Partnering to Build Customer Relationships

The Business Portfolio A business portfolio is the collection of businesses and products that make up the company Business portfolio planning involves two steps: Analyzing the current business portfolio Shaping the future portfolio by developing strategies Portfolio analysis: a management tool for evaluating a firms business mix and assessing the potential of an organizations strategic business units.

A business portfolio is the collection of businesses and products that make up the company

Business portfolio planning involves two steps:

Analyzing the current business portfolio

Shaping the future portfolio by developing strategies

Portfolio analysis: a management tool for evaluating a firms business mix and assessing the potential of an organizations strategic business units.

BCG Growth Market Share Matrix A portfolio analysis model developed by the Boston consulting group that assesses the potential of successful product to generate cash that a firm can then use to invest in new products. The vertical axis represents the attractiveness of the market, the market growth rate “high” and “low” as measurements, marketers might ask whether the total market for the product is growing 10 percent, 50 percent, 100 percent, or 200 percent annually. The horizontal axis shows the company’s current strength in the market through its relative market share. The marketers might ask whether the firm has 5 percent, 25 percent, or perhaps 75 percent of the current market. Combining the two axes creates four quadrants representing four different types of products or businesses.

A portfolio analysis model developed by the Boston consulting group that assesses the potential of successful product to generate cash that a firm can then use to invest in new products.

The vertical axis represents the attractiveness of the market, the market growth rate “high” and “low” as measurements, marketers might ask whether the total market for the product is growing 10 percent, 50 percent, 100 percent, or 200 percent annually. The horizontal axis shows the company’s current strength in the market through its relative market share. The marketers might ask whether the firm has 5 percent, 25 percent, or perhaps 75 percent of the current market. Combining the two axes creates four quadrants representing four different types of products or businesses.

3-7 Stars Cash cows Dogs Question marks High Low High Low COMPANY’S MARKET SHARE INDUSTRY GROWTH RATE

Each Cell in the Grid BCG Growth Share Matrix Stars: Stars are SBUs with products that have a dominant market share in high-growth markets. Because the SBU has a dominant share of the market, stars generate large revenues, but they also require large amounts of funding to keep up with production and promotion demands. Because the market has a large growth potential, managers design strategies to maximize market share in the face of increasing competition. Cash Cows: Cash cows have a dominant market share in a low-growth potential market. Because there's not much opportunity for new products, competitors don't‘ often enter the market. At the same time, the product is well established and enjoys a high market share that the firm can sustain with minimal funding. Firms usually milk cash cows of their profits to fund the growth of other products in a portfolio Of course, if the firm's goal is to increase revenues, having too many cash cows with little or no growth potential can become a liability.

Stars: Stars are SBUs with products that have a dominant market share in high-growth markets. Because the SBU has a dominant share of the market, stars generate large revenues, but they also require large amounts of funding to keep up with production and promotion demands. Because the market has a large growth potential, managers design strategies to maximize market share in the face of increasing competition.

Cash Cows: Cash cows have a dominant market share in a low-growth potential market. Because there's not much opportunity for new products, competitors don't‘ often enter the market. At the same time, the product is well established and enjoys a high market share that the firm can sustain with minimal funding. Firms usually milk cash cows of their profits to fund the growth of other products in a portfolio Of course, if the firm's goal is to increase revenues, having too many cash cows with little or no growth potential can become a liability.

Each Cell in the Grid BCG Growth Share Matrix Question Marks: Question marks—sometimes called problem children—are products with low market shares in fast-growth markets. When a business unit is a question mark, it suggests that the firm has failed to compete successfully. Perhaps the product! offers fewer benefits than competing products. Maybe its price is too high, its distributors are ineffective, or its advertising is too weak. The firm could pump more money into marketing the product and hope that market share will improve. But the firm may find itself "throwing good money after bad," gaining nothing but a negative cash flow and disappointment. Dogs: Dog lovers should not be offended; this label really refers to a mongrel—a product nobody wants. Dogs have a small share of a slow-growth market.

Question Marks: Question marks—sometimes called problem children—are products with low market shares in fast-growth markets. When a business unit is a question mark, it suggests that the firm has failed to compete successfully. Perhaps the product! offers fewer benefits than competing products. Maybe its price is too high, its distributors are ineffective, or its advertising is too weak. The firm could pump more money into marketing the product and hope that market share will improve. But the firm may find itself "throwing good money after bad," gaining nothing but a negative cash flow and disappointment.

Dogs: Dog lovers should not be offended; this label really refers to a mongrel—a product nobody wants. Dogs have a small share of a slow-growth market.

SWOT Analysis An analysis of an organization’s strengths (S) and weaknesses (W) and the opportunities (O) and threats (T) in the external environment All controllable elements inside a firm that influence how well the firm operates Strengths and weaknesses Technologies, physical facilities, financial stability, corporate reputation, quality products, strong brands, employees Elements outside the firm that may affect it either positively or negatively Opportunities and threats The economy, competition, technology, law, ethics, and sociocultural trends Firm cannot directly control external factors but can respond to them via planning

An analysis of an organization’s strengths (S) and weaknesses (W) and the opportunities (O) and threats (T) in the external environment

All controllable elements inside a firm that influence how well the firm operates

Strengths and weaknesses

Technologies, physical facilities, financial stability, corporate reputation, quality products, strong brands, employees

Elements outside the firm that may affect it either positively or negatively

Opportunities and threats

The economy, competition, technology, law, ethics, and sociocultural trends

Firm cannot directly control external factors but can respond to them via planning

Analyzing the Current Business Portfolio Build Increase market share Works well for question marks Hold Preserve market share Good for cash cow Harvest Increases short-term cash flow Good for weak cash cows, question marks and dogs Divest Sell or liquidate Good for dogs and question marks

Build

Increase market share

Works well for question marks

Hold

Preserve market share

Good for cash cow

Harvest

Increases short-term cash flow

Good for weak cash cows, question marks and dogs

Divest

Sell or liquidate

Good for dogs and question marks

Marketing’s Role in Strategic Planning Provide a guiding philosophy Identify attractive opportunities Design effective strategies Build strong value chains Form superior value delivery networks

Provide a guiding philosophy

Identify attractive opportunities

Design effective strategies

Build strong value chains

Form superior value delivery networks

Establish the Business Portfolio Business portfolio: the group of different products or brands owned by an organization and having different income-generating and growth capabilities Portfolio analysis: assessing the potential of a firm’s strategic business units Helps decisions regarding which SBUs should receive more or less of the firm’s resources

Business portfolio: the group of different products or brands owned by an organization and having different income-generating and growth capabilities

Portfolio analysis: assessing the potential of a firm’s strategic business units

Helps decisions regarding which SBUs should receive more or less of the firm’s resources

Three Intensive Growth Strategies: Ansoff’s Product/Market Expansion Grid

Marketing Strategy Customers grouped by: Geographic Demographic Psychographic Behavioral Market segment is a groups of consumers who respond in similar ways to marketing efforts. Market Segmentation Target marketing Market Positioning Strategy

Customers grouped by:

Geographic

Demographic

Psychographic

Behavioral

Market segment is a groups of consumers who respond in similar ways to marketing efforts.

Market Segmentation

Target marketing

Market Positioning

Marketing Strategy Evaluation of each segment’s attractiveness Selection of segments with greatest long-term profitability A company can choose one or several segments to target Strategy Market Segmentation Target marketing Market Positioning

Evaluation of each segment’s attractiveness

Selection of segments with greatest long-term profitability

A company can choose one or several segments to target

Market Segmentation

Target marketing

Market Positioning

Marketing Strategy The place the product occupies in the consumer’s mind Products are positioned relative to competing products Marketers look for clear, distinctive and desirable place in positioning Strategy Market Segmentation Target marketing Market Positioning

The place the product occupies in the consumer’s mind

Products are positioned relative to competing products

Marketers look for clear, distinctive and desirable place in positioning

Market Segmentation

Target marketing

Market Positioning

Managing the Marketing Effort Finding opportunities Avoiding threats Understanding strengths Analyzing weaknesses Analysis Planning Implementation Control Marketing Functions

Finding opportunities

Avoiding threats

Understanding strengths

Analyzing weaknesses

Analysis

Planning

Implementation

Control

Managing the Marketing Effort Marketing plans include: Executive summary Analysis of current situation Objectives Targets and positioning Marketing mix Budget Controls Marketing Functions Analysis Planning Implementation Control

Marketing plans include:

Executive summary

Analysis of current situation

Objectives

Targets and positioning

Marketing mix

Budget

Controls

Analysis

Planning

Implementation

Control

Managing the Marketing Effort Plans are turned into action with day-to-day activities Good implementation is a challenge Marketing Functions Analysis Planning Implementation Control

Plans are turned into action with day-to-day activities

Good implementation is a challenge

Analysis

Planning

Implementation

Control

Managing the Marketing Effort Evaluation of the results of marketing strategies Checks for differences between goals and performance Marketing Functions Analysis Planning Implementation Control

Evaluation of the results of marketing strategies

Checks for differences between goals and performance

Analysis

Planning

Implementation

Control

Measuring Effectiveness Return on marketing (marketing ROI) The net return from a marketing investment divided by the costs of the investments

Return on marketing (marketing ROI)

The net return from a marketing investment divided by the costs of the investments

Levels of a Marketing Plan Strategic Target marketing decisions Value proposition Analysis of marketing opportunities Tactical Product features Promotion Merchandising Pricing Sales channels Service

Strategic

Target marketing decisions

Value proposition

Analysis of marketing opportunities

Tactical

Product features

Promotion

Merchandising

Pricing

Sales channels

Service

Porter’s Generic Strategies Overall cost leadership Differentiation Focus

Overall cost leadership

Differentiation

Focus