Strategic Business Planning

for Marketers- intro

“No matter how good your product is-you are always

exactly 18 months away from complete failure.”
Nathan Myhrvold, CTO Microsoft

Prepared by: Geoff Linton

Fall ’06 Week 1&2

 Course Outcomes

• Business Planning

• Critical Thinking

• Team Work

Course shows the ultimate big company approach which is very

different than small companies.
Strategic Management Defined

• Set of managerial decisions and actions which

determine the long-run performance of a firm.
• NOT ALL DECISIONS ARE STRATEGIC!
• Criteria:
– Rare
– Consequential
– Directive
 An Organization Involves Many People,
Stakeholders, Groups, and Forces
The Organization
Society Society
Alliances Research Ownership
Other Human Shareholders
and
Organizations Resources (owners)
Development

Manufacturing Management Information

& Owners Systems
Partnerships Relationships

Suppliers Customers
Finance Marketing

Environmental Forces
Social Economic Technological Competitive Regulatory
 P ro d u c t
M is s io n D e f in itio n
P ro s p e c t M a r k e t in g
STP ( t o p l i n e s o l 'n M e e tin g s S e llin g
P r o b le m s M a r k e t S iz in g P la n p lu s S a le s P la n
B u s in e s s S u m m a ry & w o r k f lo w ) T o o ls
C o m m P la n
M odel
( to p lin e )
M RD
P r e s e n ta t io n
Hum an T a rg e t S a le s
E le v a to r M a rk e t S a le s M a r k e tin g M ix
R e s o u rc e s A u d ie n c e R e a d in e s s T e s t im o n ia ls
P it c h O p p o r tu n ity A n a ly s is
P r o f ile G a t in g
P ro c e s s
( m k tg & te c h ) F a c e to F a c e
B u s in e s s B a s ic S a le s
P la n M a rk e t B ra n d W h e e l
K ey P ro c e s s (8
R e s e a rc h P ro d u c t
D e liv e r a b le s / R e f e r e n c a b le P ro d u c t s te p s , s e ll c y c le ) W h ite P a p e r s
P r o f it a b ilit y
K e y P illa r s M ile s to n e s C u s to m e r s P o s it io n in g
( F F B , s tm t, g r id , 1
and m essage) M a r k e tin g T e le p h o n e
M ile s t o n e s S e g m e n ts
P r o je c t P la n
a n d T a r g e ts S a le s
& B rie f s
Q u a n tita tiv e P ro d u c t B lu e p r in t C ost
B a la n c e d B u s in e s s C a s e P o s it io n in g
R e s p o n s ib ility A n a ly s is J u s t if ic a t io n C u s to m e r
S c o re c a rd S tm t (3 0 , 6 0
M a trix / S c o r e c a r d P u b lic C a re
and K ey & 1 5 0 w o rd ) D e m o n s tr a t io n
E n v ir o n m e n ta l R e la tio n s &
M e tr ic s C u s t. B u y in g
A ssessm ent P re s s
P ro c e s s
F in a n c ia l a n d S a le s P u b lic ity
O th e r B u y , B u ild o r P ro c e s s N e w s F la s h
B e n c h m a rk s P a rtn e r P r o s p e c t in g P hone
E xec C o r e S k ills
SW O T - in d u s tr y Lead S e llin g S ty le S u p p o rt
D e liv e r a b le s R e q u ir e d R o ll- o u t
A n a ly s is S p e a k in g G e n e r a t io n
P ro c e s s E n g a g e m e n ts ( T a r g e t L is t )
"L au n c h " C o m p e t it iv e E -S u p p o rt
F in a n c ia l W r it e - u p ( k n o w le d g e b a
S C A o r C o re P r ic in g Funnel se, w eb, e-
C r itic a l F a c t O rg C h a rt C o m p e te n c e P r o je c tio n s
M anagem ent m a il )
D eck and P re s e n t & P ro d u c t O b je c tio n s
T re n d s F u tu r e D ir e c t M a il (to p 2 0 c lu b , fu n n e l
P la n n in g v e lo c ity , c lo s e lo o p )

W e b S it e
M a rk e t B est
C o n t in g e n c y A ssessm ent P r a c t ic e s T hought S e r v ic e
D o c u m e n ta tio
P l a n 3 T 's - A u d it L e a d e rs P ro d u c t In te g r a te d S a le s S n a p s h o ts
n
r is k s a n d " B r id g e " S k ills C o n tr a c t M a r k e t in g T r a in in g ( B u lle t in s ,
E m a il
is s u e s S e ts C hasm & C o m m u n ic a t T e m p la te s )
M a r k e t in g
PLC io n
le t te r s
S tr a te g ic
B a r r ie r s to n e w s le t te r s
M anagem ent In d u s try P la n n in g P r o p o s a ls
E n try S e m in a r s a n d C o m p e t it iv e lif e c y c le
E x p e r ie n c e R e q u ir e m e n ts
F orc e s P r o f ile s &
Job T ra d e S h o w s
D e s c r ip tio n s I n t e llig e n c e

F in a n c ia l G a t in g P ro d u c t C lo s in g B u lle t in s C hannel
W e b C a s t/ S u p p o rt
T ra c k R e c o rd P ro c e s s In d u s tr y P o s itio n in g
R e le a s e W e b in a r
(m k tg & te c h ) P o s itio n in g
M ile s to n e s C o m p e t it iv e
S c r e e n in g W r ite - u p
T o o ls S a le s S p e c ia l
F u n d in g P r in te d T r a in in g M o d e ls
S o u rc e s C a lls
T e c h n o lo g y C o lla t e r a l C ases
A ssessm ent I n n o v a t io n P ro o f
V a lu e P a rtn e rs ,
P r o p o s it io n A llia n c e s & W in /L o s s
E le c t r o n ic E le c t r o n ic
F in a n c in g S t a k e h o ld e r s A n a ly s is
C r o s s S k ills M k tg & C o lla te r a l C o r p o r a te
M ix C o m p e tiitiv e C o lla t e r a l
V is it
R e v ie w
P ro d u c t M a rk e t P ro d u c t
G o v e rn a n c e G r id s R oadm ap E W eb
Course Introduction

Week 1
 What is Strategy?

“Strategy is the direction and scope

of an organization over the long
term, which achieves advantage for
the organization through its
configuration of resources within a
challenging environment, to meet
the needs of markets and to fulfill
stakeholder expectations”

Source: tutor2u Pattern of decisions

 What is the Strategy?

• Identify competitive approach

– Low-cost leadership
– Differentiation
– Focus on a particular market niche
• Determine competitive scope
– Stages of industry’s production/distribution chain
– Geographic coverage
– Customer base
• Identify functional strategies
• Examine recent strategic moves

Virgin Atlantic & Samuel Adams beer

2.4 Hierarchy of Strategy – Strategic Alignment

Corporate Strategy
Strategic
(Grow Internationally)

Business
(Division Level)
Tactical
(grow via M and A - which co to buy,
which parts to keep)

Functional
Strategy
Operational
(Make Payments, Who to fire/hire)
3 Scopes of Strategies (p8)

1. Corporate Strategy
• “Overall direction of the company & Mgmt of businesses”
– Mission & vision
– attitude toward growth
– portfolio analysis
– parenting

2. Business Strategy
• “Competitive and Cooperative strategies”
– business unit
– Competitive & cooperative focus
 Objectives, Strategies, Policies

3. Functional Strategies
• “Maximize Resource Productivity”
 Programs, Budgets, Procedures
Results of strategy formulation

• Vision and mission • purpose and reason for

existence

• Objectives • quantifiable end results of

planned activity

• broad guidelines
• Policies

• Programs • steps needed to

accomplish plan
Each Functional Area Has a Number of Sub-
Strategies & Tactics
Marketing
Marketing
manager
manager

Product
Product Price
Price Promotion
Promotion Place
Place
Features
Features List
Listprice
price Advertising
Advertising Outlets
Outlets
Brand
Brandname
name Discounts
Discounts Personal
Personalselling
selling Channels
Channels
Packaging
Packaging Allowances
Allowances Sales promotion
Sales promotion Coverage
Coverage
Service
Service Credit
Credititems
items Public
PublicRelations
Relations Transportation
Transportation
Warranty
Warranty Payment
Paymentperiod
period Stock
Stocklevel
level

Cohesive marketing mix

Promotion
Promotion
Product Place
Place

Price
What is a Strategic Plan?

Where firm is headed -- Strategic

Vision (what you are capable of becoming)
and business Mission (main pillars)

Short and long term performance

targets -- Strategic and
financial objectives

Action approaches to achieve

targeted results -- A
comprehensive strategy
Tests of a Winning Strategy

• GOODNESS OF FIT TEST

– How well is strategy matched to
firm’s situation?
• COMPETITIVE ADVANTAGE TEST
– Does strategy lead to sustainable
competitive advantage?
• PERFORMANCE TEST
– Does strategy boost firm performance?
Unit 2 – The Process

Basic Concepts of Strategic

Management
2.1 Strategic versus Functional

• What market to be in?

• Open a new production facility?
• # people to schedule for tonight’s shift?
• Buy a new workstation PC?
• Buy SAP system?
• Change benefit program design?
2.1 Triggering Events

• Unlikely to be regular, scheduled process today

• Triggering event stimulates a change or review of
strategy and new decisions:
– New CEO
– External Intervention
– Change of Ownership
– Performance Gap
– Inflection Point (new technology, regulatory change, customer
values or preferences change)
2.2 Three Phases of Planning

• (1) Scanning and Analysis

– (units 1,2,3,4)
• (2)Formulation and Choice
– (units 5,6,7,8)
• (3) Implementation and (4) Follow-up
– (units 9,10)

Each component must be executed well in order for the entire process
to be successful!
Many organizations spend too much time on 1 and 2 and not enough
on 3 and 4
2.3 Four Phases of Strategic Management Development

• Stage 1 -Basic financial planning ($’s)

– Improve $ but create negative long term impacts

• Stage 2 - Forecast-based planning (sales, production, manpower

levels)
– Inwardly focused and ignore changing reality

• Stage 3 - Externally-oriented planning (markets, industry,

benchmarking)
– Goals not attainable, ignore internal resources and ability

• Stage 4 – Full Strategic management (people, markets, numbers,

industry, production . . .)
– Combines external reality and internal resources to improve financial
position
2.3 Strategic Management

• Benefits of linking processes, systems, people together:

– Clearer sense of strategic vision for the firm for investors,
shareholders, employees
– Sharper focus on what is strategically important
– Invest money on what is important
– Clearer priorities for staff
– Improved understanding of a rapidly changing environment
– Less likely to generate “busy work” via outdated systems and
processes
 2.4 Strategic Management Process Model

Environmenta
Strategy Strategy Evaluation
l and Control
Scanning Formulation Implementation andControl
and Control

External Mission
Reason for
Societal
existence
Environment Objectives
General Forces
What results
to
Task Strategies
accomplish
Environment
by when Plan to
Industry Analysis
achieve the
Policies
mission &
Internal objectives Broad
guidelines for Programs
Structure decision Process
Chain of Command making Activities to monitor
needed to performance
Culture Budgets and take
accomplish
Beliefs, Expectations, a plan corrective
Cost of the
Values action
programs
Procedures
Resources
Sequence
Assets, Skills
of steps
Competencies,
needed to
Knowledge do the job Performance

Feedback/Learning
Two Approaches to Corporate Strategic
Planning
• Emergent Approach
• strategy simply evolves from a stream of decisions
• deal with issues as they come up
• from grass roots/bottom upwards
• rely on spontaneity (don’t always make a plan for everything)
• managers learn as they go
• Deliberate Approach
• proactively try to steer the organization with plans & process
• usually started from the top
• use static strategic frameworks to allign (SBU’s) & plan
intended course
• track, report & measure progress
• good for mature businesses
2.5 Mintzberg’s Strategy Modes

• Entrepreneurial
– One powerful individual, founding vision
• Adaptive
– Reactive solutions to existing problems (emergent)
• Planning
– Systematic info gathering, focus on analysis (deliberate)
• Logical Incrementalism
– Top set goals, interactive process and continuous learning
Execution … Where Companies Fall Down

Competent execution of a well-

conceived strategy is the best test
of managerial excellence and a
proven recipe for organizational
success!

Good Strategy + Good Strategy Execution

= Good Management
2.7 Tips for making better decisions

• Use the 8 step process

• Analyze current performance ROI and posture
• Review corporate governance (role of board)
• Do more detailed external scan (beyond generalities) O
and T
• Do more detailed internal scan (S and W)
• Really assess SWOT and make balanced decisions
• Implement with programs, budgets and procedures
• Evaluate, feedback and control properly

– We will learn techniques for doing each one of these items in

this course!
Geoff’s Approach to the Corporate Planning Process

External Situation Internal Situation

Assessment (1a) Assessment (1b)
•Environmental Analysis •Portfolio Analysis
•Market/Industry Analysis •Performance Analysis
•Competitor Analysis •Capabilities
•Customer Analysis •Sustainable Competitive
Advantage
•Resources

SWOT Summary
(1c)
Corporate Objectives
& Vision

Strategic Alternatives &

Selection
•Levers & Thrusts
•Four Market Product Strategies grid
Deliverables, Action Plan, &
Unit 2 – Did You Get It?

1. Why has strategic management become so

important to today’s organizations?
2. How does strategic management typically
evolve in an organization?
3. In what ways could a typical organization’s
strategic management process be improved ?
 Why Do Strategies Evolve?

• There is always an ongoing need

to react to
– Shifting market conditions
– Fresh moves of competitors
– New technologies
– Evolving customer preferences
– Political and regulatory changes
– New windows of opportunity
– Crisis situations
Discussion Questions (cont’d)

4. How are strategic decisions different from

other kinds of decisions?
5. When is the planning mode of strategic
decision making superior to the entrepreneurial
and adaptive modes?
6. What are common differences between
functional and strategic actions and decisions?
Unit 1 – Generic Competitive Strategies

32
Competitive Strategies

– Focuses on improving the competitive position of a

company’s or business unit’s products or services
within the specific industry or market segment that
the firm has CHOSEN to serve.
– Firms make decisions about (1) how broadly or
narrowly to define their target markets and (2) the
basis on which they will compete
Porter’s Competitive Strategies

• Generic Competitive Strategies:

– Lower cost strategy
• Design, produce, market more efficiently than competitors
– Differentiation strategy
• Unique and superior value in terms of product quality,
features, service
Porter’s Generic Competitive Strategies
Porter’s Competitive Strategies

• Cost Leadership:
– Low-cost competitive strategy
– Aimed at broad mass market
– Need to achieve:
• Aggressive construction of efficient-scale facilities
• Cost reductions
• Cost minimization
Porter’s Competitive Strategies

• Differentiation:
– Broad mass market
– Unique product or service
– Need to:
• Charge premiums
• Lower customer sensitivity to price by offering unique
features or benefits
• Make it hard for competitors to copy your product
Porter’s Competitive Strategies

• Focused Cost Leadership:

– Low cost competitive strategy
– Focus on particular buyer group or market
– Need to:
– Stay focused on niche (don’t try to please all)
– Seek cost advantage only in target market
Porter’s Competitive Strategies

• Focused Differentiation:
– Focus on particular group or geographic market
– Seek differentiation in targeted market segment
– Serve special needs of narrow target market
Porter’s Competitive Strategies

• Stuck in the middle:

– No competitive advantage (not cost, not
differentiation, no niche)
– Will result in below-average performance
 Risks of Generic Competitive Strategies
Risks of Cost Leadership
Cost leadership is not
sustained:
• Competitors imitate.
• Technology changes.
• Other bases for cost
leadership erode.
Proximity in differentiation is
lost.
Cost focusers achieve even
lower cost in segments.
Risks of Differentiation
Differentiation is not
sustained:
• Competitors imitate.
• Bases for differentiation
become less important to
buyers.
Cost proximity is lost.
Differentiation focusers
achieve even greater
differentiation in segments.
Risks of Focus
The focus strategy is
imitated:
The target segment becomes
structurally unattractive:
• Structure erodes.
• Demand disappears.
Broadly targeted competitors
overwhelm the segment:
• The segment’s
differences from other
segments narrow.
• The advantages of a
broad line increase.
New focusers subsegment
the industry.
Key Element? VALUE
• Defining, capturing and measuring VALUE
– Shareholders – ROE, P/E, ROI . . .
– Customers – relationship, delivery, image, price, product . . .
– VALUE delivers above average returns within the industry (Ex. Unit 1 Chart)
• You need to define and create VALUE
– Define the shareholder value gap
– Define the customer value proposition
– Establish objectives and time lines
– Identify value creating processes
– Create readiness within the organization
– Fund the strategic initiatives (let some other things go!)
• Example: Allstate Insurance
One Page McKinsey handout
 Assignment 1(Part A): Generic Strategies

Competitive Advantage

Broad Target Lower Cost Differentiation

Competitive Scope

Narrow Target

Instructions: Place the leading athletic footwear companies on the matrix.

Names: ___________________________ ___________________________

___________________________ ___________________________
Assignment 1 (Part B): Describe Your Thinking

Company Why did you place it there on the Chief Competitor

matrix?
Assignment 2:
8-Step Strategic Decision-Making Process

• Based on the 8 step process (p. 14-15)

– Form into your BSG-Online teams.
– Outline the first steps of your company’s Strategic Decision-
Making process.
• 1a. Evaluate current performance results
• 1b. Determine your team’s MISSION, OBJECTIVES & STRATEGIES
(for 1st practice year)
– Put your full names on the sheet!
– You have 20 minutes to complete the exercise.

Names: ___________________________ ___________________________

___________________________ ___________________________
Assignment 2: Strategic Decision-Making Process

tep 1 – Examine and Evaluate your current:

Performance
Results

Mission

Objectives

Strategies
Appendix
 Thinking Strategically:
The Three Big Strategic Questions

1. Where are we now?

2. Where do we want to go?
– Business(es) to be in and market positions to
stake out?
– Buyer needs and groups to serve?
– Outcomes to achieve?
3. How do we get there?

Note: Harvard formula case method

 Types of Objectives Required

Financial Objectives Strategic Objectives

Outcomes focused on Outcomes focused on
improving financial improving long-
performance term, competitive
business position

Categorize the objectives on p7

Performance strategies
Focus On “Bottom Line” Criteria

Price
Unit Minus
Margin Product
Cost
Times
Profits = Revenue
Market
Minus
Unit Sales Share
Other Turnover
Costs
Market
Size
Quotes to Keep in Mind...
• “Writing a business plan forces you into disciplined
thinking if you do an intellectually honest job. An idea
may sound great in your own mid, but when you put
down the details and numbers, it may fall apart.”
– Eugene Kleiner, Venture Capitalist

• “Talent comes from the non-conformists & rebels...”

– David Ogilvy, Advertising Guru
• “but you also need a multi disciplined and aligned team!”
• “If your idea is such a great one why hasn’t someone else
done this before?
– Geoff Linton, “Marketing Coach”