Published on January 7, 2009
is planning the corporate mission for the future.. by continuous development of a strategic fit between the organization’s capabilities and its changing marketing opportunities. : is planning the corporate mission for the future.. by continuous development of a strategic fit between the organization’s capabilities and its changing marketing opportunities. Chapter 2Strategic Planning Strategic Planning Process : Strategic Planning Process Analysis of the Organization's Strengths, Weaknesses, Opportunities & Threats Develop Organizational Mission and Goals Develop Corporate and Business-Unit strategies MARKETING Objectives Strategy Marketing Plan PRODUCTION Objectives Strategy Production Plan FINANCE Objectives Strategy Finance Plan HUMAN RESOURCES Objectives Strategy Human Re- sources Plan SWOT FLOW Stage 1: Assess Organizational Opportunities and Resources : Stage 1: Assess Organizational Opportunities and Resources + “Uncontrollable” Environmental Events Timing SWOT Analysis (Circumstances) Strengths Weaknesses Opportunities Threats The Billion dollar Aftermath of Hurricane Francis & Charlie (2004)Katrina (Sept,2005)..($1.4 bil- false claims & illegal payments April,2006) : The Billion dollar Aftermath of Hurricane Francis & Charlie (2004)Katrina (Sept,2005)..($1.4 bil- false claims & illegal payments April,2006) Example: Market Opportunity .. circumstances & timing that allow a company to take action to reach a target market Stage 1: Assessing Organizational Opportunities and Resources : Will it fit? Strategic Windows Core Competencies (Relative skills) A temporary period of optimal fit between the key requirements of a market and a firm’s capabilities Marketing Mix Stage 1: Assessing Organizational Opportunities and Resources BIC maintains its core competency in stationary products, lighters, and shavers : A Competitive Advantage exists when your core competencies (relative to competition) match marketplace opportunities. BIC maintains its core competency in stationary products, lighters, and shavers Levels of Strategic Planning(Stage 2 Mission Analysis) : Levels of Strategic Planning(Stage 2 Mission Analysis) Stage 2. ESTABLISH The ORGANIZATIONAL MISSION AND GOALS : The Mission statement is set by top management A long-term view, or vision, of what the organization wants to become Mission statements answer Key Questions What business are we in? What is our core competency? How do we organize? Who are our customers? What are L-T goals? What is the ethical credo? Key Goals include: Support a consumer-oriented perspective Stage 2. ESTABLISH The ORGANIZATIONAL MISSION AND GOALS Slide 9: Distinguishes you from competing organizations Gives corporate identity & a clear direction for strategic planning In Theory: Fosters a market orientation In Reality: absence of a market … Mission Statement Benefits Result: Marketing Myopia often occurs which is a failure to define the corporate purpose from a consumer orientation perspective. The Corporate Vision Slide 10: Clip art from Ben and Jerry’s © Ben & Jerry's Homemade Holdings, Inc. 1999. Ben & Jerry's is a trademark of Ben & Jerry's Homemade Holdings, Inc. Used with permission of Ben & Jerry's Homemade Holdings, Inc., 1999. Example Developing Corporate and Business-Unit Strategies : Developing Corporate and Business-Unit Strategies Stages 3-4 Market orientation: The organization wide generation of, dissemination of and responsiveness to market intelligence on current and future customer needs. Band-Aid is a strategic business unit of Johnson&Johnson : A SBU is self supporting profit center organized around a meaningful common element such as… SBU Technology Customer Need Strategic Business Unit (SBU) Premise: individual brands compete against individual brands Band-Aid is a strategic business unit of Johnson&Johnson Mobile PCs as aPercent of Total PCs-In-Use : A sufficient number of individuals and/or organizations that have similar needs for products in a product class and have the ability, willingness, and authority to purchase those products. The “Market” Mobile PCs as aPercent of Total PCs-In-Use Computer Industry Almanac, “Mobile PCs In-Use Surpass 200M”,http://www.c-i-a.com/pr0605.htm Slide 14: Identify strategic business units (SBUs) Assess each SBU: The BCG growth-share matrix classifies SBUs into one of four categories using: Market growth rate The SBU’s relative market share within the market. Corporate Portfolio Design Determine the future role of each SBU and choose the appropriate resource allocation strategy: Build Hold Harvest Divest SBUs change positions over time Corporate level: “the collection of businesses and products that make up the company.” Boston Consulting Group’s Market Growth- Market Share Matrix : Boston Consulting Group’s Market Growth- Market Share Matrix High Relative Market Share High Low Low Product-Market Growth (%) A strategic planning tool based on the philosophy that a product’s market growth rate and market share are important in determining marketing strategy Portfolio Analysis Increase market share, increase economies of scale, increase profits Market Growth – Market Share Matrix : Market Growth – Market Share Matrix High Relative Market Share High Low STARS PROBLEM CHILD CASH COWS DOGS Low Product-Market Growth (%) Source: Perspectives. No. 66. “The Product Portfolio.” Reprinted by permission from the Boston Consulting Group, Inc. Boston, MA Copyright ã 1970. Low market share in growth mrkt needs much cash to incr mrkt sh Question Mark??? Silent Hands Behind the iPhone : Silent Hands Behind the iPhone iPhone designed in CA .. Assembled in China .. - but not by Chinese co’s - by Taiwanese co’s in China =Cheaper land, cultural ties Applied Marketing example: Market Growth – Market Share Matrix NY Times 7/18/07 They have the ability to: : They have the ability to: Cut Costs (Labor/Land) - Mass produce Work flexibly w/ customers - Receive Gov’t Incentives (Research $$$ & Tax incentives) Matrix Based Strategic Planning : Matrix Based Strategic Planning Matrix approaches to formal planning share many problems: Difficult, time-consuming, and costly to implement. Focus only on current businesses. Too strongly emphasize market share growth or growth via diversification. Designing the business portfolio also involves: Developing strategies for growth by identifying, evaluating, and selecting promising new market opportunities. Developing strategies for downsizing the business portfolio. Product – Market Growth Strategies : Market Penetration ProductDevelopment Market Development Present New P R O D U C T New M A R K E T Diversification Present Source: H.I. Ansoff, New Corporate Strategy (New York: Wiley, 1988), p. 109. Product – Market Growth Strategies (minimize risk) Product Strategy : Product Strategy Market Penetration Increase share of existing product in existing market Two strategies: Persuade users to buy more product OR Take business from competitors Present product Present market In Thousands Dare Obasanjo AKA Carnegie4Life, 7/24/06, http://www.25hoursaday.com/weblog/PermaLink.aspx?guid=0b58cb80-a6b7-40c8-8b3a-ab3f6292615e Market Share Of E-Mail- Why?(June 2006) Cultural Values Underlie Product Consumption : Cultural Values Underlie Product Consumption Beer Consumption Denmark Japan Germany France U.S.A. 44% 85% 74% 72% 49% Households where beer was drunk in the past year (USA Today, 1995) Applied Marketing Beer Suds Slide In Germany : Beer Suds Slide In Germany Fuhrmans, Vanessa. “In One German Town, Residents Measure Civic Pride by the Beer.” WSJ, A1, June 20, 2003. Applied Marketing Product Strategy : Product Strategy Market Development Find new uses for existing product Two strategies: Find new markets for product OR Aim at a broader market Present product New market Coca-Cola’sWorldwide Sales Volume Product Strategy : Product Strategy Product Development Modification of the product for the current market New product Present market Launch new products in new market to minimize risk New product New market Diversification (minimize risk) Strategy Development via Gap Analysis, Five strategy scenarios: : Strategy Development via Gap Analysis, Five strategy scenarios: Usage Gap (UG) Distribution Gap (DG) Product Gap (PG) Competitive Gap (CG) Existing Sales (ES) Existing (market) usage (EU) Market potential (MP) MP = UG + EU EU = DG+PG+CG+ES Real market share = ES ---- EU Gap Analysis: Usage Gap : Gap Analysis: Usage Gap Gap between the total potential for the market and the actual current usage by customers. Gap Analysis: Distribution Gap Sales potential in geographic regions or distribution channels where product is not currently distributed. (Market penetration) (New Markets) Gap Analysis: Product Gap : Gap Analysis: Product Gap Firm does not have product offerings in certain segments. X Differences in the effectiveness of a firm’s marketing strategy relative to its competitors. Gap Analysis: Competitive Gap (Product Development) (Market Development) Changes in PC Buying Behavior affect Dell (Direct sales) : Changes in PC Buying Behavior affect Dell (Direct sales) WSJ, “Consumer Demand and Growth in Laptops Leave Dell Behind”, 30Aug06 PC companies are refocusing on the consumer market (15% of Dell’s sales of 56 bil/yr vs the business market) where consumers like to hold & test models in a store. Consumers prefer laptops due to new wireless technology & on the go convenience. Example The Meal Gap Reasons : limited flexibility with bus schedules, getting kids there earlier, staffing and food storage space : The Meal Gap Reasons : limited flexibility with bus schedules, getting kids there earlier, staffing and food storage space Thurow, Roger. “Entrepreneur Finds Millions Left on Breakfast Table.” WSJ,31 Aug 2006, A1 Years Number of Children Who Participate in School Breakfast & Lunch Programs, in millions Millions Federal Reimbursement : Federal Reimbursement Example: School breakfasts- Free breakfast = $1.27 Reduced breakfast = $0.97 Full price breakfast = $0.23 Using USDA nutritional guidelines, he developed prepackaged meals (Cereal, crackers, fruit juice in convenient packages) www.breakfastbreaks.com Example Slide 32: Marketing Strategy Marketing Mix Elements based on audience needs Marketing Plan Formal marketing plans often are not developed as manager’s spend time on daily problems. Areva focuses on the need for security and independence to creat its marketing strategy : Areva focuses on the need for security and independence to creat its marketing strategy Reprinted with permission of Areva, Inc. ? Slide 34: A Marketing Strategy is an action plan to identify marketing objectives such as sales volume & profit & how they will be achieved in the time available. .. It specifies the creative marketing mix based on the information about the target market needs .. it allocates the (limited) resources necessary to achieve goals. Developing Marketing Strategy (Lipton targets health-concious consumers. Page 29) Planning Is a Continuous Cycle : Planning Is a Continuous Cycle 1. Assess Marketing Opportunities and Resources 4. Develop or Revise Plan for Imple- mentation and Control 3. Revise or Formulate Marketing Strategy 2. Develop or Revise Mktg. Goals Relative to Performance 5. Implement Marketing Plan Short Range – Medium Range - Long Range The Strategic Marketing Process : The Strategic Marketing Process 6. Execute the plan Control set performance standards, evaluate the results & reduce any gaps Theory Reality Desired Performance Actual Performance Adjustments allocates the (limited) resources necessary to achieve the identified goals. Stage 6:Marketing Implementation : Stage 6:Marketing Implementation Internal Marketing to employees Coordinating internal exchanges among its employees to achieve successful exchanges between the firm and its external customers Helping employees understand and accept their roles in the marketing strategy Stage Seven: Controlling Efforts and Evaluating Results : Stage Seven: Controlling Efforts and Evaluating Results Use TQM skills . . . Empower employees Benchmark Standards and performance Compare & Adjust Corporate Culture & Carl Icahn, corporate raider: Most company management is mediocre. CEO’s are survivors, they fear #2. (lean – bureaucratic, risk taking–avoidance) Source: CNBC,22May2002. Total Quality Management : Total Quality Management Total Quality Management (TQM) A philosophy that uniform commitment to quality in all areas of the organization will promote a culture that meets customers’ perceptions of quality Benchmarking Comparing the quality of the firm’s products with that of the best-performing competitors Empowerment Giving customer-contact employees authority to make marketing decisions on their own Control – set performance standards, evaluate performance, reduce /eliminate desired & actual performance Grades in schoolGold stars for athletics in schoolMerit system. Judge people;put them into slots. Competitionbetween people, groups, divisions.Incentive pay. Payfor performance.M.B.O., managementby the numbers.Business plans with reports on monthly or quarterly targets.Quotas for production,daily or weekly.Sub-optimization. Every group, every division, show a profit. : These forces create fear, self-defense, competition, humiliation. Competition for highest grades in school. Play to win, not for fun. Learning and joy in learning are smothered. Beaten, humiliated, the person drops out of school; turns to selling drugs; jail. On the job, strive for high rating. Extrinsic motivation (a day’s pay for a day’s work) crowds out intrinsic motivation, self-esteem, dignity, joy in work. Grades in schoolGold stars for athletics in schoolMerit system. Judge people;put them into slots. Competitionbetween people, groups, divisions.Incentive pay. Payfor performance.M.B.O., managementby the numbers.Business plans with reports on monthly or quarterly targets.Quotas for production,daily or weekly.Sub-optimization. Every group, every division, show a profit. Intrinsic motivation, self-esteem, dignity, joy in work, joy in learning, high at the beginning of life, are crushed by the forces of destruction shown at the top. Forces of Destruction Life Begins Life ends. Use of Internet At WorkAnd Affect On Productivity : Use of Internet At WorkAnd Affect On Productivity How much do you use the Internet at work, and does it affect your productivity? PFC workplace Survey of 705 respondents in USA Today Snapshots, “Internet Usage’s Impact on Productivity, “ Mar. 21, 2006, p. B1 ? Organizing Marketing Activities (Outcomes) : Organizing Marketing Activities (Outcomes) The Role of Marketing in an Organization Marketing Concept Objective: A Sustainable competitive advantage overtime SustainableCompetitive Advantage : SustainableCompetitive Advantage Xerox holds sustainable competitive advantage Reprinted with permission of Xerox Corporation A “Brand Franchise” Hindu Business Line (Internet Edition), “Targets differ, appeal may not”, 12/19/02, Shunu Sen http://www.blonnet.com/catalyst/2002/12/19/stories/2002121900180400.htm Marketing Unit Organization : Marketing Unit Organization Alternatives for Organizingthe Marketing Unit Low delegation of responsibilities, top management delegates little authority to levels below it. Decentralized has high delegation of authority There is no single best way! It depends… Levels of Management in Market Planning : Levels of Management in Market Planning Slide 47: I. Executive Summary II. Environmental Analysis The Marketing Environment Target Market(s) Current Marketing Objectives and Performance III. SWOT Analysis Strengths and Weaknesses Opportunities and Threats IV. Marketing Objectives (Role of Marketing) (Continued on next slide . . . ) Components of the Marketing Plan Slide 48: V. Marketing Strategies (Top Mgmt) Target Market Marketing Mix Sustainable Competitive Advantage VI. Marketing Implementation (Execute the plan) Marketing Organization Activities and Responsibilities Implementation Timetable VII. Evaluation and Control Performance Standards Financial Controls Monitoring Procedures (Audits) Components of the Marketing Plan Slide 49: OK, YOU SHOULD be able to . . . Describe the Strategic Planning Process Explain How Organizational Opportunities and Resources Affect the Planning Process Understand the Role of the Mission Statement Examine Corporate, Business-Unit, and Marketing Strategy Know About the Process of Creating the Marketing Plan Slide 50: WSJ,13Sept04 New Target Market Current: Women 35+ New: Women 25-30 Applied Marketing Example: Market Development diva Go Diva is highlighted in the word Godiva, with the “Go” in a lighter shade New Marketing Campaign : New Marketing Campaign “DIVA” is Italian for “Goddess”. Diva is Godiva’s new adv theme as “A diva feels that an indulgent lifestyle has been earned” It conveys a new message to core female customers- “Treat yourself, you’re a diva.” Ad theme is “you only live once.” Example ad: “Every woman is one part diva, much to the dismay of every man.” Media: Magazines Slide 52: Selection of a featured item every month in 275 boutiques in the U.S. Celebrity Dinner Auctions to promote truffles. Sale of small items (box of two truffles) as “divas” purchase chocolate for themselves New Incentives/Sales promotions "Godiva Appeals to the Diva Within"
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