What is a Strategy?

• A strategy is management’s game plan for

– Strengthening the organization’s competitive position
– Satisfying customers
– Achieving performance targets
• Three big questions involved in a strategy
– Where are we now?
– Where do we want to go?
– How will we get there?
– How do we know if we got there?
 Developing a Mission & Objectives

• An organization’s Mission
– Reflects management’s vision of what the organization seeks to do and
become
– Provides a clear view of what the organization is trying to accomplish for its
customers
– Indicates intent to take a business position
• An organization’s Objectives
– Convert the mission into performance targets
– Track performance over time
– Must be achievable
– Two types
• Financial – outcomes that relate to improving financial performance
• Strategic – outcomes that will result in greater competitiveness &
stronger long-term market position.
 Examples of Types of Objectives

• Financial
– Increase earnings growth from 10 to 15% per year
– Boost return on equity investment from 15 to 20% in 2009
– Achieve and maintain a AAA bond rating
• Strategic
– Increase market share from 18 to 22% in 2009
– Overtake rivals on quality or customer service by 2010
– Attain lower overall costs that rivals by 2011
– Become leader in new product introductions by 2010
– Achieve technological superiority by 2012
 What Does a Strategy Include?

• How to satisfy customers

• How to grow the business
– Organic growth
– Acquisition
• How to respond to changing industry and market conditions
• How to best capitalize on new opportunities
• How to manage each functional piece of business
• How to achieve strategic and financial objectives
 What is a Strategic Plan
• A strategic plan maps
– Where the organization is headed
– Short and long range performance targets
– Actions of management to achieve desired outcomes

• A strategic plan consists of

– Mission statement
– Strategic and financial performance objectives
– Comprehensive strategy for achieving the objectives
 A Situation Analysis
• A situation analysis identifies strategic options and opportunities
• A situation analysis involves
– External factors: Macroenvironment (industry and competitive
conditions)
– Internal factors: Microenvironment (organization’s internal situation
and competitive position)
• External factors
– Industry’s dominant economic traits
– Competitive forces
– Competitive moves of rivals
– Key success factors
– Attractiveness of the industry
SWOT Analysis
 Generic Strategies

Low-cost
leadership

Differentiation Focus

8
 PORTER’S GENERIC STRATEGIES

Competitive Advantage

Lower Cost Differentiation

Broad 1. Cost 2. Differentiation

Target Leadership
Competitive Score

Narrow 3 A. Cost Focus 3 B. Differentiation

Focus
Target

9
 Overall Low-Cost Leadership Strategy

• Strive to be the overall low-cost provider in an industry

• How to achieve overall low-cost leadership
– Scrutinize each cost activity
– Manage each cost lower year after year
– Reengineer cost activities to reduce overall costs
– Cut some cost activities out of the value chain
• Competitive strengths of a overall low-cost strategy
– Organization in a better position to compete offensively on price
– Organization is better able to negotiate with large customers
– Organization is able to use price as a defense against substitutes
– Low cost is a significant barrier to entry
– Organization is more insulated from the power of suppliers
When Does an Overall Low-Cost Strategy
Work the Best
• When price competition is a dominant competitive
force
• The product is a “commodity”
• There are few ways to differentiate the product
• Most customers have similar needs/requirements
• Customers incur low switching costs changing sellers
• Customers are large and have significant bargaining
power
 When Doesn’t a Overall Low-Cost Strategy Work

• When technological breakthroughs open cost reductions for

competitors, negating a low-cost provider’s efficiency
advantage
• Competitors find it relatively easy and inexpensive to imitate
the leader’s low cost methods
• Low-cost leader focuses so much on cost reduction that the
organization fails to respond to
– Changes in customer requirements for quality and service
– New product developments
– Reduced customer sensitivity to price
 Broad Differentiation Strategies
• Striving to build customer loyalty by differentiating an
organization’s products from competitors’ products
• Keys to success include
– Finding ways to differentiate to create value for customers
that are not easily copied
– Not spending more to differentiate than the price
premium that can be charged
• A successful differential strategy allows an organization to
– Set a premium price
– Increase unit sales
– Build brand loyalty
 Broad Differentiation Strategies
• Where to look for differentiation opportunities
– Supply chain
– Research and development
– Production activities
– Marketing, sales and service activities
• Strengths of a Differentiation Strategy
– Customers develop loyalty to the brand
– Brand loyalty acts as an entry barrier
– Organization is better able to fend off threats of substitute products because
of brand loyalty
– Reduces bargaining power of large customers since other brands are less
attractive
– Seller may be in a better position to resist efforts of suppliers to raise prices
 Pitfalls of a Broad Differentiation Strategy

• Trying to differentiate on an unimportant product

feature that doesn’t result in providing more value to
the customer
• Over differentiating the product such that the
product features exceed the customers’ needs
• Charging a price premium that buyers perceive as
too high
• Ignoring need to signal value
• Not identifying what customers consider valuable
 Best-Cost Provider Strategy

• Striving to give customers more value for the money by

combining an emphasis on low cost with an emphasis on
upscale differentiation
– Combines low-cost and differentiation
• The objective is to create superior value by meeting or beating
customer expectation on product attributes and beating their
price expectations
• Keys to success
– Match close competitors on key product attributes and beat
them on cost
– Expertise at incorporating upscale product attributes at a
lower cost than competitors
– Contain costs by providing customers a better product
 Advantages of Best-Cost Provider Strategy

• Competitive advantage comes from matching close

competitors on key product attributes and beating them on
price
• Most successful best-cost providers have skills to
simultaneously manage costs down and product quality up
• Best-cost provider can often beat an overall low-cost strategy
and a broad differentiation strategy where
– Customer diversity makes product differentiation the
norm
– Many customers are price and value sensitive
 Focus Strategies
• Focus strategy based on low-cost
– Concentrate on a narrow customer segment beating the competition
on lower cost
• Focus strategy based on differentiation
– Offering niche customers a product customized to their needs
• Overall objective of both focus strategies is to do a better job of serving a
niche target market than competitors
• Keys to success
– Choose a niche were customers have a distinctive preference, unique
needs or special requirements
– Develop a unique ability to serve the needs of a niche target market
 What Makes a Niche Attractive?

• Large enough to be profitable

• Good growth potential
• Not critical to the success of major competitors
• Organization has the resources to effectively serve the niche
• Organization can defend itself against challengers through a superior ability to
serve the niche
• No competitors are focusing on the niche
 Strengths and Risks of Focus Strategies

• Strengths
– Competitors don’t have the motivation to meet specialized needs of the niche
– Organization’s competitive advantage could be seen as a barrier to entry
– Organization’s competitive advantage provides an obstacle for substitutes
– Organization’s ability to meet the needs of customers in the niche can reduce the
bargaining power of large niche buyers
• Risks
– Broad differentiated competitors may find effective ways to enter the niche
– Niche customers’ preferences may move toward the product attributes desired by a
larger market segment
– Profitability may be limited if too many competitors enter the niche
 Commitment to Chosen Strategy

• Implementing rewards & incentives inducing employees to make the strategy

work
– The reward structure must motivate people to do the very things it takes to mjake the
strategy work successfully
• Requiring results, not intentions
• Keys to implementing pay-for-performance programs
– Make performance targets the basis for structuring the incentive system
– Ensure performance targets are clearly defined and every person/group is accountable
for achieving them
– Be fair and impartial in comparing actual performance against targets
– Avoid rewarding non-performers
– Explore reasons for deviations (“poor” individual performance or circumstances beyond
the individual’s control)
 Developing Marketing
Strategies and Plans

A strategy is a theory about how to gain competitive

advantages. A good strategy is a strategy that
actually generates such advantages.
Strategic management is the process of specifying an
organizations objectives, developing policies and
plans to achieve these objectives, and allocating
resources so as to implement the plans.

1-22
Levels of Goals/Plans & Their Importance
External Message
Legitimacy for
Mission
investors, customers,
Statement suppliers, community

Strategic Goals/Plans
Senior Management
(Organization as a whole)
Internal Message
Tactical Goals/Plans Legitimacy,
Middle Management motivation,
(Major divisions, functions) guides,
rationale,
standards

Operational Goals/Plans
Lower Management
(Departments, individuals)
 Strategic Goals and Plans
Strategic Goals
• Where the organization wants to be in the future
• Pertain to the organization as a whole
• Strategic Plans
• Action Steps used to attain strategic goals
• Blueprint that defines the organizational activities and
resource allocations
• Tends to be long term

1-24
 Levels of a Marketing Plan

• Strategic • Tactical
– Target marketing – Product features
decisions – Promotion
– Value proposition – Merchandising
– Analysis of marketing – Pricing
opportunities – Sales channels
– Service
 Developing Marketing Strategies and Plans
Part 1: Marketing Value and Customer Value
1) The value delivery process
2) The value chain
3) Core competencies
4) A holistic marketing orientation and customer value
5) The central role of strategic planning
Part 2: Corporate and Division Strategic Planning
1) Defining the corporate mission
2) Defining the business
3) Assessing growth opportunities
4) Organization and organizational culture
 Developing Marketing Strategies and
Plan
Part 3: Business Unit Strategic Planning
1) The business Mission
2) SWOT analysis
3) Goal Formulation
4) Strategic Formulation
5) Program Formulation and Implementation
6) Feedback and Control
 Developing Marketing Strategies and Plan

Part 4: Product Planning: the Nature and Contents

of a Marketing Plan
1) Contents of the Marketing Plan
 Hennes and Mauritz
Walk into a trendy Soho boutique in New York City and you might see high-fashion T-
shirts selling for $250.
Go into an H&M clothing store and you can see a version of the same style for $25.
Founded 55 years ago as a provincial Swedish clothing company, H&M (Hennes and
Mauritz) has morphed into a clothing colossus with 950 stores in 19 countries and
an ambitious plan to expand by 100 stores a year.
The reason H&M has reached this point while so many other stores—such as once-hot
Italian retailer Benetton—have floundered is that the company has a clear mission
and the creative marketing strategies and concrete plans with which to carry it out.
"Our business concept is to give the customer unbeatable value by offering fashion and
quality at the best price," is the H&M mission as expressed on the company's Web
site.
Nothing could sound simpler. Yet, fulfilling that mission requires a well-coordinated
set of marketing activities.
 Hennes and Mauritz
For instance, it takes H&M an average of three months to go
from a designer's idea to a product on a store shelf, and
that "time to market" falls to three weeks for "high-
fashion" products. H&M is able to put products out quickly
and inexpensively by:
1- having few middlemen and owning no factories
2-buying large volumes
3- having extensive experience in the clothing industry
4- having a great knowledge of which goods should be bought
from which markets
5- having efficient distribution systems
6- being cost-conscious at every stage
 Nike
Critics of Nike often complain that its shoes cost almost nothing to make
yet cost the consumer so much.
True, the raw materials and manufacturing costs involved in the making
of a sneaker are relatively cheap, but marketing the product to the
consumer is expensive.

Materials, labor, shipping, equipment, import duties, and suppliers'

costs generally total less than $25 a pair.

Compensating its sales team, its distributors, its administration, and its
endorsers, as well as paying for advertising and R&D, adds $15 or so
to the total.

Nike sells its product to retailers to make a profit of $7. The retailer
therefore pays roughly $47 to put a pair of Nikes on the shelf. When
the retailer's overhead (typically $30 covering personnel, lease, and
equipment) is factored in along with • a $10 profit, the shoe costs
the consumer over $80.
 Encyclopedia Britannica
http://corporate.britannica.com
The Encyclopædia Britannica was born in 18th-century Scotland amid the great intellectual ferment
known as the Scottish Enlightenment.
According to one chronicler of Britannica history, Edinburgh in the mid-1700s was "a city on the
verge of a golden age, a center of learning and a home of writers, thinkers, and philosophers.“
The first edition of the Britannica was published one section at a time, over a three-year period,
beginning in 1768.
In 1990 Encyclopædia Britannica found itself in a precarious competitive environment. CD-ROMs
and the internet had become the study tools of choice for students and others.
Microsoft’s Encarta CD-ROM and IBM’s CD-ROM joint venture World Book were attracting
Britannica’s customers.
The result book sales fell 83% between 1990-1997.

In 1994 the company developed Britannica Online, the first encyclopedia for the Internet, which
made the entire text of the Encyclopædia Britannica available worldwide. That year the first
version of the Britannica on CD-ROM was also published.
According to a company official: “we’re reinventing our business. We are not in the book business.
We’re in the information business.”
By the 2006, the company had become a premier information site on the internet (200,000)
subscribers and (150,000) web sites selected
Part 1: Marketing Value and Customer Value

Marketing and Customer Value

• Marketing involves satisfying consumers' needs and wants.

• The task of any business is to deliver customer value at a profit.

• In a hypercompetitive economy with increasingly rational buyers faced with

abundant choices, a company can win only by fine-tuning the value delivery
process and choosing, providing, and communicating superior value.

• The traditional view of marketing is that the firm makes something and then
sells it. In this view, marketing takes place in the second half of the process.
• The company knows what to make and the market will buy enough units to
produce profits. Companies that subscribe to this view have the best chance of
succeeding in economies marked by goods shortages where consumers are not
fussy about quality, features, or style—for example, with basic staple goods in
developing markets.
Part 1: Marketing Value and Customer Value
The value delivery process

Marketing and Customer Value

The value delivery process
• The traditional view of the business process, however, will not
work in economies where people face abundant choices.

• The smart competitor must design and deliver offerings for well-
defined target markets.

• This belief is at the core of the new view of business processes,

which places marketing at the beginning of planning.
Part 1: Marketing Value and Customer Value
The value delivery process

Marketing and Customer Value

The value delivery process
Part 1: Marketing Value and Customer Value
The value delivery process

Marketing and Customer Value

The Japanese have further refined this view with the following concepts:

• Zero customer feedback time. Customer feedback should be collected continuously after
purchase to learn how to improve the product and its marketing.
• Zero product improvement time. The company should evaluate all improvement ideas
and introduce the most valued and feasible improvements as soon as possible.
• Zero purchasing time. The company should receive the required parts and supplies
continuously through just-in-time arrangements with suppliers. By lowering its
inventories, the company can reduce its costs.
• Zero setup time. The company should be able to manufacture any of its products as soon
as they are ordered, without facing high setup time or costs.
• Zero defects. The products should be of high quality and free of flaws.
Part 1: Marketing Value and Customer Value

2) The Value Chain

Michael Porter of Harvard has proposed the value chain as
a tool for identifying ways to create more customer
value.
According to this model, every firm has combination of
activities performed to design, produce, market, deliver,
and support its product.

The value chain identifies nine strategically relevant

activities that create value and cost in a specific
business.
These nine value-creating activities consist of five
primary activities and four support activities.
Part 1: Marketing Value and Customer Value

2) The Value Chain

The primary activities cover the sequence of:

1) bringing materials into the business (inbound
logistics),
2) converting them into final products (operations),
3) shipping out final products (outbound logistics),
4) marketing them (marketing and sales), and
5) servicing them (service).
Part 1: Marketing Value and Customer Value

2) The Value Chain

The support activities:

1) technology development,
2) human resource management,
3) firm infrastructure—are handled in certain specialized
departments, as well as elsewhere.
4) Procurement and hiring
Part 1: Marketing Value and Customer Value
Part 1: Marketing Value and Customer Value

2) The Value Chain

Core Business Processes Include:
1) The market sensing process.
2) The new offering realization process. All the activities involved in
researching, developing, and launching new high-quality offerings quickly and
within budget.
3) The customer acquisition process. All the activities involved in
defining target markets and prospecting for new customers.
4) The customer relationship management process.
5) The fulfillment management process. All the activities involved in
receiving and approving orders, shipping the goods on time, and collecting
payment.
Part 1: Marketing Value and Customer Value

3) Core Competencies
To be successful, a firm also needs to look for competitive advantages
beyond its own operations, into the value chains of suppliers,
distributors, and customers.
Value delivery network also called A supply Chain

To carry out its core business processes, a company needs resources.

Many companies today have partnered with specific suppliers and

distributors to create a superior value delivery network also called a
supply chain.
 3) Core Competencies

• To carry out its core business processes, a company needs

resources—labor power, materials, machines, information, and
energy.

• Traditionally, companies owned and controlled most of the

resources that entered their businesses, but this situation is
changing.

• Many companies today outsource less critical resources if they

can be obtained at better quality or lower cost.

• Frequently, outsourced resources include cleaning services,

landscaping, and auto fleet management. Kodak even turned
over the management of its data processing department to IBM.
 4) What is Holistic Marketing?
Holistic marketing sees itself as integrating the
value exploration, value creation, and value
delivery activities with the purpose of building
long-term, mutually satisfying relationships and co
prosperity among key stakeholders.
 Holistic Marketing Framework
The holistic marketing framework is designed to
address three key management questions:
1. Value exploration - How can a company identify
new value opportunities?
2. Value creation- flow can a company efficiently
create more promising new value offerings?
3. Value delivery- How can a company use its
capabilities and infrastructure to deliver the
new value offerings more efficiently?
A Holistic Marketing Orientation And Customer
Value
A Holistic Marketing Orientation And Customer Value

VALUE EXPLORATION

VALUE EXPLORATION Because value flows within and

across markets that are themselves dynamic and
competitive, companies need a well-defined strategy for
value exploration. Developing such a strategy requires an
understanding of the relationships and interactions among
three spaces:
(1) the customer's cognitive space;
(2) the company's competence space; and
(3) the collaborator's resource space.
The customer's cognitive space reflects existing and latent
needs and includes dimensions such as the need for
participation, stability, freedom, and change
A Holistic Marketing Orientation And Customer Value

VALUE CREATION
To exploit a value opportunity, the company needs value-
creation skills. Marketers need to:
1) identify new customer benefits from the customer's
view;
2) utilize core competencies from its business domain;
and
3) select and manage business partners from its
collaborative networks.
• To craft new customer benefits, marketers must
understand what the customer thinks about, wants,
does, and worries about.
• Marketers must also observe who customers admire,
who they interact with, and who influences them
 VALUE DELIVERY
• Delivering value often means substantial investment in
infrastructure and capabilities.
• The company must become proficient at customer
relationship management, internal resource management,
and business partnership management.
• Customer relationship management fallows the company
to discover who its customers are, how they behave, and
what they need or want.
• It also enables the company to respond appropriately,
coherently, and quickly to different customer
opportunities.
 Developing Marketing Strategies and Plan

5) The Central Role of Strategic Planning

Companies should have the capabilities to:

1) understanding customer value,
2) creating customer value,
3) delivering customer value,
4) capturing customer value, and
5) sustaining customer value.
 5) The Central Role of Strategic Planning

Only a handful of companies stand out as master marketers:

Procter & Gamble, Southwest Airlines, Nike, Disney,
Nordstrom, Wal-Mart, McDonald's, Marriott Hotels, and
several Japanese (Sony, Toyota, Canon) and European
(IKEA, Club Med, Bang & Olufsen, Electrolux, Nokia, Lego,
Tesco) companies
These companies focus on the customer and are:
1)organized to respond effectively to changing customer
needs.
2)have well-staffed marketing departments, and
3) all their other departments—manufacturing, finance,
research and development, personnel, purchasing—also
accept the concept that the customer is king.
Part 2: Corporate and Division Strategic Planning

Part 2: Corporate and Division Strategic Planning

1) Defining the corporate mission

2) Defining the business
3) Assessing growth opportunities
4) Organization and organizational culture

1-52
Part 2: Corporate and Division Strategic Planning

What is Strategic Planning?

 It is the managerial process that helps to

develop a strategic and viable fit between
the firm’s objectives, skills, resources
with the market opportunities available.

 It helps the firm deliver its targeted

profits and growth through its
businesses and products.
Part 2: Corporate and Division Strategic Planning

Strategic Planning calls for

Action in three key areas?
1. managing a company's businesses as
an investment portfolio.
2. assessing each business's strength by
considering the market's growth rate
and the company's position and fit in
that market.
3. establishing a strategy for each
business.
 Understanding Marketing Management

To understand marketing management, we must

understand strategic planning.
Most large companies consist of four
organizational levels:
1) the corporate level,
2) the division level,
3) the business unit level, and
4) the product level.
 Understanding Marketing
Management
Corporate headquarters is responsible for designing a corporate
strategic plan to guide the whole enterprise; it makes decisions
on the amount of resources to allocate to each division, as well as
on which businesses to start or eliminate.

Each division establishes a plan covering the allocation of funds to

each business unit within the division.

Each business unit develops a strategic plan to carry that business

unit into a profitable future.
Finally, each product level (product line, brand) within a business
unit develops a marketing plan for achieving its objectives in its
product market.
 Part 2: Corporate and Division Strategic
Planning

A marketing plan is the central

instrument for directing and
coordinating the marketing effort. It
operates at a strategic and tactical level.
planning, implementation, and control cycle
 1) Defining the corporate mission

How to go about it?

 Defining the corporate mission
 Establishing SBUs
 Allocating resources for SBUs
 Planning for new business
 Corporate Mission
 This seeks to embody the entire goals
of the organization and the objective of
its existence.
 It seeks to provide a sense of purpose,
direction and opportunity
 Defining the Corporate Mission
According to Peter Drucker, it is time to ask some
fundamental questions. What is our business? Who is the
customer? What is of value to the customer? What will
our business be? What should our business be?
Successful companies continuously raise these questions
and answer them thoughtfully and thoroughly.
5 questions that the firm must
ask itself
 What is our business?
 Who is our customer?
 What does our customer need?
 What will our business be?
 What should our business be?
Organizations develop mission statements to share with managers,
employees, and (in many cases) customers.

A clear, thoughtful mission statement provides

employees with a shared sense of purpose,
direction, and opportunity. The statement guides
geographically dispersed employees to work
independently and yet collectively toward realizing
the organization's goals.
 Good mission Statements

Mission statements are at their best when they

reflect a vision, an almost "impossible dream"
that provides a direction for the company for the
next 10 to 20 years.

Fred Smith wanted to deliver mail anywhere

in the United States before 10:30 A.M. the
next day, so he created FedEx.
 Rubbermaid Commercial Products, Inc.

“Our vision is to be the Global Market Share

Leader in each of the markets we serve. We
will earn this leadership position by
providing to our distributor and end-user
customers innovative, high-quality, cost-
effective and environmentally responsible
products. We will add value to these products
by providing legendary customer service
through our Uncompromising Commitment
to Customer Satisfaction.”
 Motorola

“The purpose of Motorola is to honorably

serve the needs of the community by providing
products and services of superior quality at a
fair price to our customers; to do this so as to
earn an adequate profit which is required for
the total enterprise to grow; and by doing so,
provide the opportunity for our employees and
shareholders to achieve their personal
objectives.”
 eBay

“We help people trade anything on earth.

We will continue to enhance the online
trading experiences of all—collectors,
dealers, small businesses, unique item
seekers, bargain hunters, opportunity
sellers, and browsers.”
 Good Mission Statements
1. focus on a limited number of goals. The
statement, "We want to produce the highest-quality products, offer the most
service, achieve the widest distribution, and sell at the lowest prices" claims too
much.

2. stress the company's major policies and

values.
3. define the major competitive spheres
within which the company will operate
 Major Competitive Spheres
• Industry
• Products
• Competence
• Market segment
• Vertical channels (Ford)
• Geographic
 Defining the Business

Companies often define their businesses in

terms of products:
They are in the "auto business" or the "clothing
business."
 Defining the Business
A business must be viewed as a customer-satisfying
process, not a goods-producing process.

Products are transient; basic needs and customer

groups endure forever. Transportation is a need:
the horse and carriage, the automobile, the
railroad, the airline, and the truck are products that
meet that need.
 Dimensions that Define a Business

• Customer groups
• Customer needs
• Technology
 Table 2.2
Product Orientation vs. Market Orientation
Company Product Market
Missouri-Pacific We run a railroad We are a people-
Railroad and-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 entertain people

 Strategic Business Units

The purpose of identifying the company's

strategic business units is to develop separate
strategies and assign appropriate funding.
 SBU has three characteristics:
1. It is a single business or collection of related
businesses that can be planned separately
from the rest of the company.
2. It has its own set of competitors.
3.It has a manager who is responsible for
strategic planning and profit performance and
who controls most of the factors affecting profit.
Assessing Growth Opportunities
1. planning new businesses,
2. downsizing, or
3. terminating older businesses.
Assessing Growth Opportunities
Assessing Growth Opportunities
Assessing Growth Opportunities
 Assessing Growth Opportunities
1.market-penetration strategy The
company first considers whether it could gain
more market share with its current products
in their current markets .
2.market-development strategy the
company considers whether it can find or
develop new markets for its current products.
3.product-development strategy the
company considers whether it can develop
new products of potential interest to its
current markets
4.diversification strategy the company will
also review opportunities to develop new
products for new markets.
Four market-product strategies: alternative ways to expand
sales revenues for Ben & Jerry’s
Success Probability for each of the 4 basic
strategies:
Diversification strategy 1 in 20
Market-development Strategy is 1 in 4
Product-development strategy 50-50
Market-penetration is the highest
 Business Unit Strategic Planning
 Strategic planning:
 Developing a strategic fit between
 organizational goals and capabilities, and
 changing marketing opportunities
Ben & Jerry’s: a SWOT analysis to get it growing again
 Business Portfolio Analysis

• Cash Cows – SBU’s that have a high market share of a

low sales growth market.
• Stars – SBU’s that have a high market share of a high
sales growth market.
• Question marks – SBU’s that have a low market share of
a high sales growth market.
• Dogs – SBU’s that have a low market share of a low sales
growth market.
IV. Strategic Marketing Process
Process whereby an organization allocates it
marketing mix resources to reach its target
markets.

Planning
Implementation
Evaluation
 Planning Phase – Situation Analysis

• This is a complete analysis of the firm’s

situation which assesses internal strengths and
weaknesses and external threats and
opportunities (SWOT)
• Internal analysis (controllable factors) – assess
the firm itself to identify strengths and
weaknesses
• External analysis (uncontrollable factors) –
assess the firm’s external environment to
identify opportunities and threats
 Planning Phase – Marketing Objectives

• Specific levels of performance desired for a

product or product line to be achieved by a
given date.
• Stated in terms of market share, sales, profit
• Should be measureable, attainable, specific,
and consistent with organizational objectives
 Planning Phase: Product Positioning

• The process where marketers try to create a

product image or identity in the minds of their
target market relative to competitive
products.
 Implementation Phase
• Process of putting the marketing plan into
action.
• Involves great attention to detail
 Evaluation
• Involves measuring the results of the actions
from the implementation phase and
comparing them with goals set in the planning
phase.

sales analysis
market share analysis
expense to sales analysis
 SBU
Establishing Strategic Business Units
A business can be defined in terms of three
dimensions: customer groups, customer needs, and
technology.

 It is a company within a company

 The business is differentiated from the rest of the
company
 It has its own set of competitors
 It is a separate profit centre
 Assigning Resources to SBUs

The purpose of identifying the company’s strategic

business units is to develop separate strategies and
assign appropriate funding to the entire business
portfolio.

Senior managers generally apply analytical tools to classify

all of their SBUs according to profit potential. Two of the
best-known business portfolio evaluation models are
the Boston Consulting Group model and the General
Electric model.
 SWOT Analysis
 Strengths
 Weaknesses
 Opportunities
 Threats
 The Mission

• Mission; the organization’s reason for existing.

• Mission Statement;
– states the basic business scope and operations
– may include the market and customers
– some may describe company values, product
quality, attitudes toward employees
 Corporate Headquarters’
Planning Activities

• Define the corporate mission

• Establish strategic business units (SBUs)
• Assign resources to each SBU
• Assess growth opportunities
 Good Mission Statements
• Focus on a limited number of goals
• Stress major policies and values
• Define major competitive spheres
• Take a long-term view
• Short, memorable, meaningful
 Characteristics of SBUs
• It is a single business or collection of related
businesses
• It has its own set of competitors
• It has a leader responsible for strategic
planning and profitability
 Ansoff’s Product-Market
Expansion Grid

• Market penetration strategy

• Market development strategy
• Product development strategy
• Diversification strategy
 Ansoff’s Product-Market
Grid
Current products New products

Mkt penetration Product development

Current Mkts
strategy strategy

Mkt development Diversification

New Mkts strategy strategy
 The Planning Process
 Analysing Market opportunities
 Developing Marketing strategies
 Planning Marketing Programs
 Managing the Marketing Effort
 Marketing Control
 Annual Plan control
 Profitability control
 Strategic Control
 Market-oriented strategic planning

Market-oriented strategic is the managerial process of

developing and maintaining a viable fit among the
organization’s objectives, skills, and resources and its
changing market opportunities.

The aim of strategic planning is to shape the company’s

businesses and products so that they yield target profits
and growth and keep the company healthy despite any
unexpected threats that may arise.
1-103
 What is Corporate Culture?
Corporate culture is the shared experiences,
stories, beliefs, and norms that characterize
an organization.
 SWOT Analysis
• Strengths
• Weaknesses
• Opportunities
• Threats
 Goal Formulation
Once the company has performed a SWOT analysis, it can proceed to
develop specific goals for the planning period.

• Unit’s objectives must be hierarchical

• Objectives should be quantitative
• Goals should be realistic
• Objectives must be consistent
 Market Opportunity Analysis (MOA)

• Can the benefits involved in the opportunity be

articulated convincingly to a defined target market?
• Can the target market be located and reached with
cost-effective media and trade channels?
• Does the company possess or have access to the
critical capabilities and resources needed to deliver
the customer benefits?
 Strategic Formulation
1) Porter’s Generic Strategies
• Overall cost leadership
• Differentiation
• Focus

2) Strategic Alliances

There are four forms of MDS.

1)Exporting
2)Licensing
3)Joint Venture
4)Direct Investment
Marketing Plan Contents

 Executive summary
 Table of contents
 Situation analysis
 Marketing strategy
 Financial projections
 Implementation controls
Evaluating a Marketing Plan

 Is the plan simple?

 Is the plan specific?
 Is the plan realistic?
 Is the plan complete?