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Chapter 3
- 1. 1 Chapter 3 The Roleof Marketing in Strategic Planning
- 2. Learning Objectives 1. Explaincompany-wide strategic planning. 2. Understand the concepts of stakeholders, processes, resources, and organization as they relate to a high-performing business. 3. Explain the four planning activities of corporate strategic planning. 4. Understand the processes involved in defining a company’s mission and setting goals and objectives. 5. Discuss how to design business portfolios and growth strategies.
- 3. Market-Oriented Strategic Planning Market-oriented strategicplanning is the managerial process of developing and maintaining a feasible fit between the organization’s objectives, skills and resources and its changing market opportunities The strategic plan provides the roadmap of where to go. How does the marketing support the overall objectives and mission of the company? Major Challenge: Rapidly changing marketplace and environment
- 4. Strategy Planning Unique Challengesof the hotel industry Major chains do not always own all properties they manage Owners of hotel-resorts often show little interest or knowledge of their property Professional managers often are not trained in strategic planning, also has little power on owner Hotel and secondary property within the hotel Global strategic alliances may further complicate the planning process
- 5. Nature of High-Performance Business Stakeholders Whoare they? Set strategies to satisfy Processes Determine the optimal mix of segments Create cross functional team leaders Resources Align resources with organization – determine necessary sources to be successful and who can provide them Organization Structure, policies & culture
- 6. An Example ofMultidivisional Structure: The Walt Disney Company Source: The Walt Disney Company Annual Report CEO Walt Disney Attractions Walt Disney Studios Consumer Products Motion Pictures TV Animation Disney Channel Magic Kingdom CA Tokyo Disneyland Euro- Disney Walt Disney World Disney Stores Licensing Publishing Disney Music Software and Education Catalog Marketing Magic Kingdom FL Epcot Center Disney- MGM Studios
- 7. Steps in StrategicPlanning Figure 3-1 Steps in Strategic Planning.
- 8. 1. Defining thecompany mission 1. Mission Statement – what is it? 2. Can’t be too narrow or broad 3. Operate on core competencies 4. Motivating 5. Life-Span of mission 2. Setting company objectives and goals 1. A hierarchy of objectives (detailed supporting objectives) for each level of management 2. Based on guest wants (how do you know what guests want?) 3. Create broad strategies and then add details 3. Designing the business portfolio 1. Design to satisfy customer needs (customer-satisfying process), not product 2. Focus on GROWTH Corporate Strategic Planning
- 9. 1. Defining theCompany’s Mission Start from asking: What is our business? Who is the customer? What do customers value? What should our business be? The Answer: A Mission Statement A statement of the organization’s purpose – what it wants to accomplish in the larger environment. Define business by need rather than product.
- 10. Market-oriented Business Definitions CompanyProduct-Oriented Definition Market-Oriented Definition Disney We run theme parks We create fantasies—a place where America still works the way it’s supposed to. Wal-Mart We run discount stores We deliver value through low prices to Middle Americans. Ritz- Carlton Hotels We rent rooms We create the Ritz-Carlton experience—one which enlivens the senses, instills well-being, and fulfills even the unexpressed wishes and needs of our guests.
- 11. Chick-fil-A Mission Statement “Be America’sBest Quick-Service Restaurant.”
- 12. Establishing Strategic BusinessUnits (SBUs) A single business or a collection of related businesses that can be planned for separately from the rest of the company It has its own set of competitors It has a manager who is responsible for strategic planning and profit performance Designing the Business Portfolio
- 13. 13 1. Market Penetration 2. Market Development 3.Product Development 4. Diversification Existing Markets New Markets Existing Products New Products Product/ Market Expansion Grid Intensive Growth
- 14. 14 Question Marks • Highgrowth, low share • Build into Stars or phase out • Require cash to hold market share Question Marks • High growth, low share • Build into Stars or phase out • Require cash to hold market share Stars • High growth & share • Profit potential • May need heavy investment to grow Cash Cows • Low growth, high share • Established, successful SBU’s •Produce cash Cash Cows • Low growth, high share • Established, successful SBU’s •Produce cash Dogs • Low growth & share • Low profit potential Dogs • Low growth & share • Low profit potential Relative Market Share High Low MarketGrowthRate LowHigh Analyzing Current SBU’s: Boston Consulting Group Approach ?
- 15. GROWTH Intensive growth: seekingopportunities for current businesses Integrative growth: seeking opportunities related to current businesses Backward integration (acquiring a supplier) Forward integration (acquiring distributor of your product) Horizontal integration (acquiring a competitor) Diversification growth: seeking opportunities unrelated to current businesses Concentric diversification strategy Horizontal diversification strategy Conglomerate diversification strategy
- 16. Customer-Driven Marketing Strategyand Marketing Mix Market segmentation Market targeting Market differentiation and positioning From 4Ps to 4Cs Product vs. customer solution Price vs. customer cost Place vs. convenience Promotion vs. communication 16
- 17. Review 1. Strategic planning. 2.Stakeholders, processes, resources, and organization 3. Four planning activities of corporate strategic planning. 4. The processes involved in defining a company’s mission and setting goals and objectives. 5. Business portfolios and growth strategies.
- 18. Business Strategy Planning BusinessMission SWOT Analysis Internal Environment Analysis External Environmental Analysis Goal Formulation (What do we want?) Three Performances Measures (Return, Operating margins, and REVPAR) Strategy Formulation (How do we get there?) Strategies Alliances Program formulation Implementation Feedback and Control
- 19. Preparing a MarketingPlan I. Executive Summary II. Corporate Connection III. Positioning Statement IV. Environmental Analysis and Forecasting V. Segmentation and Targeting VI. Next Year’s Objectives VII. Action Plans VIII. Resources Needed to Support Strategies and Meet Objectives IX. Marketing Control X. Presenting and Selling the Plan XI. Preparing for the Future
Editor's Notes
- #5 American airlines in One World with British airways and Cathay Pacific United Airways in the star alliance with Singapore airlines, Air Canada.
- #6 In the past, stockholders were the main stakeholders. Company work is carried out by each department. However, departmental organization has some problems. Departments typically work to achieve their own goals Characteristics of a high-performance business Stakeholders Traditionally, most businesses focused on their stockholders Today businesses increasingly recognize that they must nurture other stakeholders, including customers, employees, suppliers, and the communities where their businesses are located Processes Companies are increasingly refocusing their attention on the need to manage processes even more than departments They are studying how tasks pass from department to department as well as the impediments to creative output They are now building cross-functional teams that manage core business processes Resources To carry out processes, a company needs such resources as personnel, materials, machines, and information More companies today have decided to outsource less critical sources Organization Companies must work hard to align their organization’s structure, policies, and culture to the changing requirements of business strategy
- #10 Many organizations develop formal mission statements that answer these questions A mission statement is a statement of the organization’s purpose—what it wants to accomplish in the larger environment Management should avoid making a mission too narrow or too broad The mission should be based on a company’s distinctive competencies A clear mission statement acts like an “invisible hand” that guides people in the organization Studies have shown that firms with well-crafted mission statements have better organizational and financial performance
- #13 Yum: KFC Pizza hut, and Taco Bell
- #14 Growth is important. Growth helps companies to compete and to attract top talent. Companies need to be careful when pursuing growth because growth should not be an objective. The goal or objective should be profitable growth.
- #15 When a market’s annual growth rate falls to less than 10%. It falls into cash cows. Still the market leader. Support star business, question marks, and dog. Your objective: build, hold, harvest (increase short-term cash flow regardless of the long-term effect). Divest (sell or liquidate the business).
- #16 Integrative Growth Opportunities in diversification, market development, and product development can be seized through integrating backward, forward, or horizontally within that business’s industry Backward integration Acquiring a suppliers, such as a food distributor Forward Integration Acquiring tour wholesalers or travel agents Horizontal Integration Acquiring one or more competitors, provided that the government does not bar the move Diversification Growth Makes sense when good opportunities can be found outside the present businesses Concentric Diversification Strategy Seeking new products that have technological or marketing synergies with existing product lines Horizontal Diversification Strategy Searching for new products that could appeal to its current customers, Hotels and restaurants selling gift items Conglomerate Diversification Strategy Seeking new businesses that have no relationship to the company’s current technology, products, or markets