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Unit 2.1 strategic planning and the role of marketing


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  • This is a nice summary of the strategic planning process. It says almost nothing about the role of the marketing function in that process.
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Unit 2.1 strategic planning and the role of marketing

  1. 1. Unit 2. STRATEGIC PLANNING AND THE MARKETING PROCESS ObjectivesParticipants will be able to:1.explain company wide strategic planning and itsfour steps2.explain functional planning strategies assessmarketing role in strategic planning 1
  2. 2. The Role of Marketing in Strategic Planning 2
  3. 3. Strategic PlanningStrategic planning is the process ofdeveloping and maintaining a feasible fitbetween the organization’s objectives,skills, and resources and its changingmarketing opportunities(Kotler pg38) 3
  4. 4. Strategic PlanningAccording to Kotler (2012)Company-wide strategic planningguides marketing strategy and planning.Like marketing strategy, the company’sbroad strategy must also be customeroriented 4
  5. 5. Reasons for PlanningKotler posit the following :•if one does not know where we aregoing any road will take us there.•The essence of strategic planning is thecontemplation of current decision choicesin the light of their probable outcome inthe future•The future is unpredictable however it isnot a arbitrary stroll. 5
  6. 6. Four Organizational Levels of Strategic PlanningCorporate SBU Unit Functional Source: Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc. Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458 6
  7. 7. Four Steps in Corporate Strategic Planning Process1. Defining the corporate mission.2. Establishing strategic business units (SBU).3. Assigning resources to each SBU.4. Developing growth strategies(Kotler pg 38- 7
  8. 8. Corporate Strategic Planning (cont.) Defining the corporate mission1. Mission• The organization’s mission should define the competitive scopes within which the company will operate. Industry scope, products and applications scope, competencies scope, market-segment scope, and vertical scope.• should be market oriented and defined in terms of satisfying basic customer needs.• Products and technologies eventually become outdated, but basic market needs may last forever. 8
  9. 9. Corporate Strategic Planning (cont.) Defining the corporate mission1. MissionQuestions to ask in establishing Mission!• What is our current business?• Who is the customer?• What do consumers value?• What do we do best?• What should our business be?• What are the values/ethics of the company? 9
  10. 10. Corporate Strategic Planning (cont.) Defining the corporate mission 2. Establishing Strategic Business UnitsBusiness portfolio:The collection of businesses andproducts that make up the company.( Kotler 2012 pg 40) • Define Strategic Business Units by need rather than product. food vs patty Convenience food fried chicken etc Defining business by product lead to • Defined in terms of satisfying basic customer needs to Marketing myopia – communication vs blackberry phone. 10
  11. 11. Corporate Strategic Planning (cont.) Defining the corporate mission 2. Establishing Strategic Business UnitsKotler contends the following :The best business portfolio is the one that best fits thecompany’s strengths and weaknesses to opportunities inthe environment.Business portfolio planning involves two steps.  First, the company must analyze its current business portfolio and determine which businesses should receive more, less, or no investment. Portfolio analysis The process by which Management evaluates the products and businesses that make up the company. (Kotler 2012 pg 42) 11
  12. 12. Corporate Strategic Planning (cont.) Defining the corporate mission 2. Establishing Strategic Business UnitsKotler contends the following :  Second, it must shape the future portfolio by developing strategies for growth and downsizing.The purpose of strategic planning is to find ways inwhich the company can best use its strengths to takeadvantage of attractive opportunities in the environment. 12
  13. 13. Corporate Strategic Planning (cont.) Defining the corporate mission3. Assigning Resources to Each SBU • The best-known portfolio-planning /analytical tools is the Boston Consulting Group growth-share matrix are used to guide management in evaluating each SBU. Growth-share matrix A portfolio-planning method that evaluates a company’s SBUs in terms of its market growth rate and relative market share. (Kotler…..) • Anticipate changes 13
  14. 14. Analyzing Current SBU’s: Boston Consulting Group Approach Stars Question Marks Question MarksMarket Growth Rate High • High growth & share •• High growth, low share High growth, low share • Profit potential ••Build into Stars or phase out Build into Stars or phase out • May need heavy ••Require cash to hold Require cash to hold investment to grow market share market share Cash Cows Cash Cows Dogs Dogs •• Low growth, high share •• Low growth & share Low growth & share Low growth, high share ••Low profit potential ••Established, successful Low profit potential Low Established, successful SBU’s SBU’s •Produce cash •Produce cash High Low Relative Market Share 14
  15. 15. Limitations of the BostonConsulting Group ApproachPorter contend that the BCG matrix exhibits thefollowing weaknesses:1.Market growth rate is only one factor in industryattractiveness:-  relative market share is only one factor in competitive advantage.  The growth-share matrix overlooks many other factors in these two important determinants of profitability.2.The framework assumes that each SBU isindependent of the others.  In some cases, a business unit that is a "dog" may be helping other business units gain a competitive advantage. 15
  16. 16. Limitations of the Boston Consulting Group Approach3. The matrix depends heavily upon the breadth of the definition of the market.  A business unit may dominate its small niche, but have very low market share in the overall industry.In such a case, the definition of the market can make the difference between a dog and a cash cow.(adapted from: 16
  17. 17. Corporate Strategic Planning (cont.)4. Developing Growth Strategies – Intensive growth opportunities: Identify further opportunities to achieve growth within the company’s current business. • Market penetration strategy seeks to increase current products in current markets. • Market development strategy looks for new markets in which current products can expand. • Product development strategy considers new product possibilities 17
  18. 18. Corporate Strategic Planning (cont.)- Diversification growth opportunities: Identify opportunities to add attractive businesses that are unrelated to the company’s current businesses. • Concentric diversification strategy: Company seeks new products that have technological and/or marketing synergy with existing product lines, even though the product may appeal to a new class of customers 18
  19. 19. Corporate Strategic Planning (cont.) - Horizontal diversification strategy: Company searches for new products that could appeal to its current customers though technologically unrelated to its current product line. • Conglomerate diversification strategy.- Financial Institutions getting into real estates or farming business 19
  20. 20. Corporate Strategic Planning (cont.)- Integrative growth opportunities. • Backward integration: An Agro-Processing company acquiring one of its supplier’ farms. • Forward integration: Agro Processing company acquiring a distribution chain. conglomerate • Horizontal integration: An Agro-Processing company acquiring one or more competitors, provided the government does not bar the move. or Digicel acquiring Claro 20
  21. 21. Developing Growth Strategies in the Age of Connectedness Product/ Market Expansion Grid Existing New Products ProductsExisting 1. Market 3. ProductMarkets Penetration Development New 2. Market 4. DiversificationMarkets Development Adapted from Kotler. pg44 21
  22. 22. Developing Growth Strategiesin the Age of Connectedness Product/ Market Expansion Grid Product/market expansion grid:- A portfolio-planning tool for identifying company growth opportunities through market penetration, market development, product development, or diversification 22
  23. 23. Business Strategy Planning – Planning at the SBU Level1. Business mission2. External environment analysis– opportunities and threats3. Internal environment analysis– strengths and weaknesses4.Goal Formulation (What do we want?)–The vision 23
  24. 24. Business Strategy Planning (cont.)5. Strategy Formulation (How do we get there?) - Michael Porter’s three generic types of strategy: • Overall cost leadership • Differentiation • Focus – Strategic Alliances: companies need to form strategic alliances with domestic or multinational companies that complement or leverage their capabilities and resources to achieve leadership nationally or globally. 24
  25. 25. Business Strategy Planning (cont.)6. Program formulation. Corporations must develop hiring, training, advertising, and other programs to support their strategy.7. Implementation. If A firm is going to be successful , it must communicate its strategy to its employees and it must have the resources to carry out its strategy. 25
  26. 26. Business Strategy Planning (cont.)8. Feedback and control are unquestionably essential to track outcomes and monitor new developments in the market environment. 26
  27. 27. References and further reading1. Principles of Marketing. K2. Kotler, (2013), Marketing for Hospitality and Tourism, Retrieved Jan, 2013 from:……• Kotler, P. Bowen J, Makens,J 2003 Pearson Education, Inc Retreaved from:• (2002-2010) The BCG Growth-Share Matrix Retrieved January 09, 2012 from :• 27