MKTG101 Lecture 2.

1: Strategic Planning
Formal Planning
 Many companies operate without formal plans, yet these plans can provide many benefits such as:
 Encouraging management to think ahead systematically
 Forcing managers to clarify objectives and policies
 Better coordination of company efforts
 Clearer performance standards for control
 Helping the company to anticipate and respond quickly to environmental changes and sudden
developments

Strategic Planning
 The managerial process of creating and maintaining a fit between the organization’s objectives and
resources and evolving market opportunities
 Fitting resources and objectives to the evolving market opportunities in hopes of long run profitability
and growth

Steps in Strategic Planning

Defining the Company’s Business and Mission

 A Mission Statement is a statement of the organization’s purpose
 Characteristics of a good mission statement:
i. Market oriented
ii. Realistic
iii. Specific
iv. Fit market environment
v. Distinctive competencies
vi. Motivating
 E.g. LinkedIn: “To connect the world’s professionals to make them more productive and successful.”

Setting Company Objectives and Goals

 Need a more specific marketing objective
and strategy for each of the company’s
differing business units
Designing the Business Portfolio
 The business portfolio is the collection of businesses and products that make up the company
 The company must:
 Analyse its current business portfolio or Strategic Business Units (SBUs)
 Decide which SBUs should receive more, less, or no investment
 Develop growth strategies for adding new products or businesses to the portfolio
 Characteristics of SBUs:
i. A distinct mission and specific target market
ii. Control over their resources
iii. Their own competitors
iv. Plans independent of other SBUs

Boston Consulting Group’s Portfolio Matrix

Analysing Current SBUs: Boston Consulting Group Approach

Sony’s BCG Matrix

 Compare yourself with the next biggest competitor (1-
10x)
 Size of circle proportional to size of the dollar sale
Strategies for Resource Allocation
 Build
 Provide financial resources if SBU (Question Mark) has potential to be a Star
 Hold
 Preserve market share if SBU is a successful Cash Cow. Use cash flow for other SBUs
 Harvest
 Increase short-term cash returns
 Appropriate for all SBUs except Stars
 Divest
 Get rid of SBUs with low shares in low-growth markets

Problems with Portfolio Matrix Approaches

 Difficult, time consuming and costly to implement
 Difficult to define SBUs and measure market share and growth
 Focus on classifying current businesses, often offering little advice for future planning

SWOT Analysis
 Internal
 Strengths
 Things the company does well
 Weaknesses
 Things the company does not do well
 Strengths and Weaknesses examples
 Production costs, marketing skills, employee capabilities, financial resources, available
technology, company/brand image
 External
 Opportunities
 Conditions in the external environment that favour strengths
 Threats
 Conditions in the external environment that do not relate to existing strengths or favour
areas of current weaknesses
 Opportunities and Threats examples
 Social, demographic, economic, technological, political/legal, competitive

Opportunity Matrix
Threat Matrix

SWOT Analysis

The Strategic-Planning Gap

Developing Growth Strategies in the Age of Connectedness

 Product/Market Expansion Grid
 1. Market Penetration
 Making more sales to current customers without changing its products
 How? Add new stores in current market areas, improve advertising, prices, service, or store
design
2. Market Development
 Develop new markets for its current products
 How? Identify new demographic or geographic markets
3. Product Development
 Offering modified or new products to current markets
 How? New styles, flavours, colours, or modified products
4. Diversification
 New products for new markets
 How? Start up or buy new businesses

Discussion Questions
 Beyond evaluating current business, designing the business portfolio involves finding future businesses
and products the company should consider.
 Apply the product/market expansion grid to assess how one of the following companies might grow:
 Starbucks; Apple; Levi-Strauss; SMU

Managing the Marketing Effort

 Managing the marketing process requires 4
marketing management functions – analysis,
planning, implementation, and control
 Marketing Analysis
 Managing the marketing function begins with
a complete analysis of the company’s
situation
 The company should conduct a SWOT
Analysis
 Marketing Planning
 Through strategic planning, the company decides what it wants to do with each business unit
 Marketing planning involves choosing marketing strategies that will help the company attain its
overall strategic objectives
 Marketing Implementation
 The process that turns marketing plans into marketing actions to accomplish strategic marketing
objectives
 While marketing planning addresses the what and why of marketing activities, implementation
addresses the who, where, when, and how.
 Marketing Control
 Because many surprises occur during the implementation of marketing plans, marketers must
practice constant marketing control – evaluating the results of marketing strategies and plans
and taking corrective action to ensure that the objectives are attained.
 Operating Control involves checking ongoing performance against the annual plan and taking
corrective action when necessary. Its purpose is to ensure that the company achieves the sales,
profits, and other goals set out in its annual plan.
 Strategic Control involves looking at whether the company’s basic strategies are wll matches to
its opportunities