Marketing Management - Unit I

8/2/2019 Marketing Management - Unit I

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Unit I - Strategic Planning

Reena Talwar



“Meeting needs profitably”.

“is an organizational function and a set of

processes for creating, communicating &delivering value to customers and formanaging customer relationships in ways thatbenefit the organization & its stakeholders.”



“ art and science of choosing target marketsand getting, keeping and growing customersthrough creating, delivering and

communicating superior value”



Production Concept:

Oldest concepts in business

Consumers prefer products that are widely available

and inexpensive. Concentration is on achieving high production

efficiency, low costs and mass distribution.



Product Concept:

Consumers favor those products that offer the mostquality, performance or innovative features.

Focus is on making superior products andimproving them over time.



Selling Concept:

Focuses on aggressive selling and promotion effort.

Is practiced most aggressively with unsought

products, goods that buyers normally do not think ofbuying such as insurance, encyclopedias and funeralplots.



Marketing Concept:

Continuous process of discovering and convertingconsumer wants into appropriate products and

services by developing a product on the basis ofmarketing research, creating demand for theseproducts through promotion and serving thedemand through transport and storage with the helpof channels of distribution such as wholesalers and

retailers. New concept is consumer oriented and is founded

on consumer satisfaction.



Understanding customer value, creatingcustomer value, delivering customer value,capturing customer value and sustaining

customer value.

Strategic Planning is important to ensure thatproper activities are selected and executed.



Large companies consist of 4 organizational levels:

Corporate level which is responsible for designing

a corporate strategic plan to guide the whole

enterprise, for making decisions on the amount of

resources to allocate to each division and on which

businesses to start or eliminate.





Corporate planning

Division planning

Business Planning

Product Planning

Organizing

Implementing

Measuring results

Diagnosing results

Taking corrective action

Planning Implementing Controlling



Establish the framework within whichdivisions and business units prepare theirplans.

All corporate headquarters undertake fourplanning activities:-

Defining the corporate mission

Establishing strategic business units

Assigning resources to each SBU

Assessing growth opportunities



Organizations develop mission statements to share withmanagers, employees and customers which provides ashared sense of purpose, direction and opportunity.

Good mission statements focus on A limited number of goals.

Company‟s major policies and values.

Define major competitive spheres within which

company will operate(industry, products, marketsegment etc)



Examples of good mission statements: McDonalds - "To provide the fast food customer food

prepared in the same high-quality manner world-widethat is tasty, reasonably-priced & delivered consistently

in a low-key décor and friendly atmosphere." Key Market: The fast food customer world-wide

Contribution: tasty and reasonably-priced foodprepared in a high-quality manner

Distinction: delivered consistently (world-wide) in alow-key décor and friendly atmosphere.

Google – “We organize the world„s information and

make it universally accessible and useful"



Organizations develop mission statements to share withmanagers, employees and customers which provides ashared sense of purpose, direction and opportunity.

Good mission statements focus on A limited number of goals.

Company‟s major policies and values.

Define major competitive spheres within which

company will operate(industry, products, marketsegment etc)



Companies often define businesses in terms ofproducts.

However, market definitions are superior to

product definitions. Large Cos normally manage quite different

businesses, each requiring its own strategy andthus classify its businesses into StrategicBusiness Units (SBUs)



Establishing SBU

Single or related businesses that can be plannedseparately from the rest of the Organization

Has its own set of competitors

Has a manager who can control factors affecting

profit, and is responsible for planning and profitperformance



Once SBUs are identified, separate strategiesare developed for each SBU and thus, areassigned appropriate funding.



Involves planning new businesses, downsizingor terminating older businesses.

Growth Strategies Intensive Growth

Integrative Growth

Diversification Growth



Intensive: is to identify opportunities to achievegrowth within current businesses.

Ansoff Growth Matrix



Integrative: is to identify opportunities to build oracquire businesses that are related to currentbusinesses.

Backward integration - The company sets up subsidiaries that manufacture some

of the inputs used in the production of its goods. For example, an automobilecompany may own a tire company, a glass company, and a metal company.Control of these three subsidiaries is intended to create a stable supply of inputsand ensure a consistent quality in their final product. It was the main businessapproach of Ford and other car companies in the 1920s, who sought to minimizecosts by centralizing the production of cars and car parts.

Example: Mc Donald‟s- they own the farms where they raise the cows, chickens,potatoes and wheat

Forward Integration - The company sets up subsidiaries that distribute or marketproducts to the end market or use the products themselves. An example of this is amovie studio that also owns a chain of theaters

http://www.wikinvest.com/wiki/Ford_Motor_Company_(F)

http://www.wikinvest.com/wiki/Ford_Motor_Company_(F)



Diversification: is to identify opportunities to addattractive businesses that are unrelated to currentbusinesses.

Wipro is a good example. When the young Azim Premji took charge of the group

after the untimely demise of his father, Wipro was essentially involved in thevegetable oils business. Premji had the vision to take Wipro into new unrelatedbusinesses including computer hardware, lighting soaps, medical equipment andcomputer software.

GE‟s financial services business, is as different as one can imagine from its

traditional engineering businesses. GE‟s businesses, range from medical devices toaircraft engines. Its diversified portfolio has lent a degree of stability to earnings,which may not have been possible had it focused on one single industry. Few largecompanies have been able to match GE‟s ability to maximize value forshareholders.



Downsizing and Divesting Older Businesses

Companies must not only develop new businesses butalso carefully prune, harvest, or divest tired oldbusinesses to release needed resources and reducecosts.

Weak businesses require huge managerial attention.

Managers must therefore, focus on growthopportunities.



Various Steps Involved:

I Business Mission: Each business unit defines its specificmission within broader company mission.

II SWOT Analysis : involves monitoring externalenvironment and internal environment External Environment (Opportunity and Threat Analysis)

Monitor key macro economic forces (demographic, economic, natural,technological, political-legal and social-cultural)

Micro environment actors (customers, suppliers, competitors, distributors anddealers)

Internal Environment (Strengths/Weaknesses Analysis) Evaluation of internal strengths and weaknesses



III Goal Formulation

Company should develop specific goals with respect tomagnitude and time.

Most business units pursue a mix of objectives including

profitability, sales growth, market share improvement, riskcontainment, innovation and reputation.

Must be arranged hierarchically from the most imp to least imp

Should be stated quantitatively whenever possible

Should be realistic and must be consistent

IV Strategy Formulation Overall cost leadership

Differentiation

Focus



V Program Formulation and Implementation

Once business unit has developed its strategies, it must workout detailed support programs.

In implementing strategy, companies must not lose sight of

their multiple stakeholders and their needs

VI Feedback and control After implementation of strategy, a firm needs to track results

and monitor new developments.

Marketplace does change and thus, company would need toreview and revise its implementation, programs, strategies oreven objectives.



Is a written document that summarizes whatthe marketer has learned about themarketplace and indicates how the form plans

to reach its marketing objectives. Contains tactical guidelines for marketing

programs and financial allocations over theplanning period.

Are becoming more customer and competitororiented and better reasoned and morerealistic.



Executive summary and table of contents

Situational analysis

Marketing strategy

Financial Projections include sales forecast,expense forecast and break even analysis.

Implementation control outlines controls for

monitoring and adjusting implementation ofthe plan.

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Marketing Management - Unit I

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