0 Ch2 - Strategies and Plans - Hau

MARKETING MANAGEMENT
CHAPTER 2
DEVELOPING MARKETING
STRATEGIES & PLANS
Le Nguyen Hau
School of Industrial Management – HCMUT
2019
1
CONTENT
1. The role of marketing strategy and plan

2. Corporate & Division strategic plan
3. Business Unit Marketing strategic plan
4. Product/Service Marketing plan
Monday, January 11, 2 Le Nguyen Hau 2

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I. THE ROLE OF
MARKETING STRATEGY & PLAN

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I. THE ROLE OF MARKETING STRATEGY & PLAN
Market-oriented strategic planning:

The managerial process of developing and maintaining a
viable fit between the organization’s objectives, skills, and
resources and its changing market opportunities.
It aims:
to shape the company’s businesses and products so they
yield target profits and growth.

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Strategic planning must prioritize in three key areas:
 Managing the businesses as an investment portfolio,
 Assessing the market’s growth rate and the

company’s position in that market,
 Establishing a strategy: a game plan for achieving

each business’s long-run objectives.

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At 4 levels: corporate, division, business unit, product.

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II. CORPORATE/DIVISION STRATEGIC PLAN

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Corporate/division strategy:
Establishes the framework within which the divisions and
business units prepare their strategic plans.
Tasks include:
1. Defining the corporate mission,
2. Establishing strategic business units (SBUs),
3. Assigning resources to each,
4. Assessing growth opportunities.

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1. Defining the Corporate Mission:

 What is our business?
 Who is our customer?
 What is of value to the customer?
 What will/should our business be?

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 Market definitions of a business describe the business as a
customer satisfying process.
 Products are transient. Basic needs & customer groups endure.
Example: Transportation is a
need. Bicycle, automobile,
railroad, airline, ship, and
truck are products that meet
that need.

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Examples of business mission:
Company Product Market

Missouri-Pacific We run a railroad We are a people-and-
Railroad goods mover
Xerox We make copying We improve office
equipment productivity
Standard Oil We sell gasoline We supply energy
Columbia Pictures We make movies We market entertainment

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Good mission statements:
 Focus on a limited number of goals
 Stress the company’s major policies and values
 Define the major competitive spheres within which the

company will operate
 Take a long-term view
 Are as short, memorable, and meaningful as possible

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2. Establishing strategic business units (SBUs):
 A single business or collection of related businesses
 Has its own set of competitors
 Has a leader responsible for strategic planning and

profitability.

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3. Assigning resources to each SBU:
Decide how to allocate corporate resources to each SBU:
Portfolio-planning models:
 The GE/McKinsey Matrix classified each SBU based on its

competitive advantage and the attractiveness of its industry.
Management could decide to grow, harvest, draw cash, or hold
on to the business.
 BCG’s Growth-Share Matrix used relative market share and

annual rate of market growth for investment decisions,
classifying SBUs as dogs, cash cows, question marks, and stars.
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Decide how to allocate corporate resources to each SBU:
Shareholder / market value analysis:
 Rely on shareholder value analysis and on whether the market

value of a company is greater with an SBU or without it.
 These value calculations assess the potential of a business

based on growth opportunities from global expansion,
repositioning or retargeting, and strategic outsourcing.

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4. Assessing growth opportunities:
 Intensive Growth
 Integrative Growth
 Diversification Growth
 Downsizing/Divesting

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Assessing growth opportunities:

Intensive Growth: Integrative Growth:
Companies should first review A business can increase sales
opportunities for improving and profits through backward,
existing businesses. forward, or horizontal
integration within its industry.
Use “product-market expansion
grid”: Use Merging/Acquisition (M&A),
 market-penetration – market joint venture or alliances.
development – product
development - diversification.

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Assessing growth opportunities:

Diversification Growth: Downsizing and Divesting Older
When good opportunities exist Businesses:
outside the present businesses,
and the industry is highly attractive, Carefully prune, harvest, or divest
and the company has the right mix tired old businesses to release
of business strengths to succeed. needed resources for other uses
and reduce costs.
 Concentric strategy: seek new products that
have technological/marketing synergies with
existing products, appealing to a different
customer groups.
 Horizontal strategy: requires a different
manufacturing process.
 Conglomerate strategy: New businesses with
no relationship to its current technology,
products, or markets.

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III. BUSINESS UNIT STRATEGIC PLANNING

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III. BUSINESS UNIT STRATEGIC PLANNING
Tasks include (8 steps):
1. Defining the SBU mission (within the corporate broader mission),
2. Analyzing external opportunities and threats,
3. Analyzing internal strengths and weaknesses,
4. Formulating goals,
5. Formulating strategy,
6. Formulating supporting programs,
7. Implementing the programs,
8. Gathering feedback and exercising control.

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III. BUSINESS UNIT STRATEGIC PLAN
Steps 2&3: SWOT ANALYSIS: External environment
Marketing opportunity:
an area of buyer need and interest that a company has a
high probability of profitably satisfying.
Three main sources of marketing opportunities.
 To offer something that is in short supply.
 To offer an existing product/service in a new/superior way.
 To offer a totally new product or service.
To evaluate opportunities, use market opportunity analysis (MOA) to ask:
1. Can we articulate the benefits convincingly to a defined target market?
2. Can we locate the target market and reach them efficiently?
3. Do we possess the critical capabilities and needed resources to deliver the offers?
4. Can we deliver the offers better than any actual or potential competitors?
5. Will the financial rate of return exceed our required threshold for investment?
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SWOT ANALYSIS: External (macro/micro) environment
Environmental threats:
challenges posed by an unfavorable trend or development
that, in the absence of defensive marketing action, would
lead to lower sales or profit.

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SWOT ANALYSIS: Internal environment
Strengths & Weaknesses:

Internal resources/capabilities that facilitate/impede its
dealing with external opportunites and threats.

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Checklist for Evaluating Strengths/ Weaknesses:

MARKETING Performance Importance
Weakness  Strength Low  High
1. Company reputation
2. Market share
3. Customer satisfaction
4. Customer retention
5. Product quality
6. Service quality
7. Pricing effectiveness
8. Distribution effectiveness
9. Promotion effectiveness
10. Sales force effectiveness
11. Innovation effectiveness
12. Monday,
Geographical
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coverage
January 11, 2 Le Nguyen Hau 24
Similar analysis for …
Finance:
13. Cost or availability of capital
14. Cash flow
15. Financial stability
Manufacturing:
16. Facilities
17. Economies of scale
18. Capacity
19. Able, dedicated workforce
20. Ability to produce on time
21. Technical manufacturing skill
Organization:
22. Visionary, capable leadership
23. Dedicated employees
24. Entrepreneurial / Innovation orientation
25. Flexible or responsive
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Step 4: FORMULATING GOALS:
Goals are objectives that are specific in terms of magnitude &

time.
Most SBUs pursue a mix of objectives, including:

+ Profitability,
+ Sales growth,
+ Market share improvement,
+ Risk containment,
+ Innovation,
+ Reputation.

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FORMULATING GOALS (cont):
The SBU sets these objectives and manages by objectives (MBO).
For an MBO system to work, the objectives must meet four criteria:
[1] being arranged hierarchically;
[2] quantitative;
[3] realistic;
[4] consistent.

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Step 5: FORMULATING STRATEGY:
Strategy is a game plan for achieving objectives.
Competing firms directing the same strategy to the same

target market constitute a strategic group. The firm that
carries out the strategy best will make the most profits.

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Porter’s three generic strategies:
Overall cost leadership: achieves the lowest production &

distribution costs  lower price  win market share.
Differentiation: achieves superior performance in an important

customer benefit area, valued by a large market segment.
Focus: focuses on 1-2 narrow segments, and pursues cost

leadership or differentiation within that segment.

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Step 6&7: PROGRAM FORMULATION & IMPLEMENTATION:
Great strategy can be sabotaged by poor implementation.
Strategy is only one of seven elements (7S) for success:
Strategy, Structure, Systems: The “hardware” of success.

Style, Skills, Staff, Shared values: The “software” of success
(McKinsey & Company).

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Step 8: FEEDBACK & CONTROL:
 Strategy will inevitably erode due to environmental changes.
  the firm might remain efficient, yet lose effectiveness.
  can be changed by strong leadership, in advance of a crisis.
  monitoring the changes and adopt new goals and behaviors.
 It is more important to “do the right thing” than “to do things right”.
The successful companies excel at both (Peter Drucker)

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IV. PRODUCT/SERVICE MARKETING PLANNING

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Marketing Plan:
A document specifies market analysis, and indicates how the
firm plans to reach its marketing objectives, and helps direct
and coordinate the marketing effort.
Should have a mktg plan for each product/service in an SBU.
Mktg plan is one of the most important outputs of the mktg tasks.

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The marketing plan operates at two levels:

The strategic marketing plan lays out the target markets and
the firm’s value proposition, based on an analysis of the best
market opportunities.
The tactical marketing plan specifies the marketing tactics,

including product features, promotion, merchandising, pricing,
sales channels, and service.

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IV. PRODUCT/SERVICE MARKETING PLAN
Marketing Plan contents:

1. Executive summary
2. Table of contents
3. Situation analysis:
• Background data on sales, costs, the market, competitors, and
the macro-environment.
• Define the market, how big is it, and how fast is it growing?
• What are the relevant trends and critical issues?
• Firms will use all this information to carry out a SWOT analysis.

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4. Marketing strategy:
 Defines the mission, marketing and financial objectives, and

needs the market offering is intended to satisfy as well as its
competitive positioning.
 All these require inputs from other areas, such as purchasing,

manufacturing, sales, finance, and human resources.

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5. Marketing tactics:
Outlines the marketing activities that will be undertaken to execute the
marketing strategy.
 The product/service offering section: key attributes & benefits that will
appeal to target customers.
 The pricing section: general price range and how it might vary across
different types of customers/channels, including incentive/discount.
 The channel section: different forms of distribution, direct or indirect.
 The communications section: high-level guidance about the general
message and media strategy. Firms will often develop a separate
communication plan.
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6. Financial projections:
 Include a sales forecast, an expense forecast, and a break-even analysis.
- Revenue: forecasted sales volume by month and product category;
- Expense: expected costs, broken down into finer categories.
- Break-even analysis.
 Risk analysis: Three scenarios (optimistic, pessimistic, and most likely)
for each uncertain variable.

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7. Implementation & controls:
 Outlines the controls for monitoring & adjusting implementation of the
plan.
 Spells out the goals and budget for each month/quarter so management
can review each period’s results and take corrective action as needed.

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EXAMPLE OF A MARKETING PLAN
Pegasus Sports International (see attached file)

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Evaluating a Marketing Plan:

 Is the plan simple and succinct? Clear – practical – not too long -
easy to understand & act.
 Is the plan complete? all necessary elements - balance between

completeness – details – simplicity - focus.
 Is the plan specific? Objectives concrete and measurable - Clear

action plan - specific dates - persons – budgets
 Is the plan realistic? sales goals – budgets - dates - possible

concerns.

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End of chapter 2
Thanks for your attention !

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MARKETING MANAGEMENT

1. The role of marketing strategy and plan

Monday, January 11, 2 Le Nguyen Hau 2

Monday, January 11, 2 Le Nguyen Hau 3

Market-oriented strategic planning:

Monday, January 11, 2 Le Nguyen Hau 4

Strategic planning must prioritize in three key areas:

 Managing the businesses as an investment portfolio,

 Assessing the market’s growth rate and the

 Establishing a strategy: a game plan for achieving

Monday, January 11, 2 Le Nguyen Hau 5

At 4 levels: corporate, division, business unit, product.

Monday, January 11, 2 Le Nguyen Hau 6

Monday, January 11, 2 Le Nguyen Hau 7

Monday, January 11, 2 Le Nguyen Hau 8

1. Defining the Corporate Mission:

Monday, January 11, 2 Le Nguyen Hau 9

 Products are transient. Basic needs & customer groups endure.

Monday, January 11, 2 Le Nguyen Hau 10

Examples of business mission:

Company Product Market

Monday, January 11, 2 Le Nguyen Hau 11

Good mission statements:

 Focus on a limited number of goals

 Stress the company’s major policies and values

 Define the major competitive spheres within which the

 Are as short, memorable, and meaningful as possible

Monday, January 11, 2 Le Nguyen Hau 12

2. Establishing strategic business units (SBUs):

 A single business or collection of related businesses

 Has its own set of competitors

 Has a leader responsible for strategic planning and

Monday, January 11, 2 Le Nguyen Hau 13

 The GE/McKinsey Matrix classified each SBU based on its

 BCG’s Growth-Share Matrix used relative market share and

Decide how to allocate corporate resources to each SBU:

Shareholder / market value analysis:

 Rely on shareholder value analysis and on whether the market

 These value calculations assess the potential of a business

Monday, January 11, 2 Le Nguyen Hau 15

4. Assessing growth opportunities:

Monday, January 11, 2 Le Nguyen Hau 16

Assessing growth opportunities:

Monday, January 11, 2 Le Nguyen Hau 17

Assessing growth opportunities:

Monday, January 11, 2 Le Nguyen Hau 18

III. BUSINESS UNIT STRATEGIC PLANNING

4. Product/Service Marketing plan

Monday, January 11, 2 Le Nguyen Hau 19

Monday, January 11, 2 Le Nguyen Hau 20

Monday, January 11, 2 Le Nguyen Hau 22

Strengths & Weaknesses:

Monday, January 11, 2 Le Nguyen Hau 23

Checklist for Evaluating Strengths/ Weaknesses:

Step 4: FORMULATING GOALS:

Goals are objectives that are specific in terms of magnitude &

Most SBUs pursue a mix of objectives, including:

Monday, January 11, 2 Le Nguyen Hau 26

FORMULATING GOALS (cont):

The SBU sets these objectives and manages by objectives (MBO).

Monday, January 11, 2 Le Nguyen Hau 27

Step 5: FORMULATING STRATEGY:

Strategy is a game plan for achieving objectives.