Marketing planning
By: Kalpana Ambepitiya
PhD (Marketing) (Reading), MBA (Finance) (IGNOU-India), MPA (Colombo-Sri Lanka), PGD (Finance) (IGNOU-India),
BBMgmt Hons (Marketing) (Kelaniya-Sri Lanka)
Strategic planning is Critical • A strategic business plan describes the overall
direction an organization will pursue within its environment and also guides the allocation of resources. It provides the logic that integrates the perspectives of functional departments and operating units, and points them all in the same direction.
• A strategic marketing plan outlines the actions necessary, who is responsible, when and where they will be completed, and how they will be coordinated. A marketing plan is carried out within the context of a firm’s broader strategic business plan.
Strategic Planning
Strategic planning is the process of developing and maintaining a strategic fit between the organization’s goals and capabilities and its changing marketing opportunities
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Market-Oriented Mission
Mission statement: The organization’s purpose, what it wants to accomplish in the larger environment
Market-oriented mission statement: Defines the business in terms of satisfying basic customer needs
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Business Portfolio
The business portfolio is the collection of businesses and products that make up the company
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Strategic business unit
• Strategic business unit (SBU) is a unit of the company that has a separate mission and objectives that can be planned separately from other company businesses
• Company division• Product line within a division• Single product or brand
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The Strategic Planning Process
1. Defining Organizational Mission
2. Establishing SBUs
3. Setting Marketing Objectives
4. Performing Situation Analysis
5. Developing Marketing Strategy
6. Implementing Tactical Plans
7. Monitoring Results
Feedback
Step One in the Strategic Planning Process
1. Define Organizational Mission
1. Defining Organizational Mission
Defining the organizational mission refers to a long-term commitment to a type of business and a place in the market. It “describes the scope of the firm and its dominant emphasis and values,” based on a firm’s history, current management preferences, resources, and distinctive competence, and on environmental factors.
Step Two in the Strategic Planning Process
2. Establishing SBUs
Each of a firm’s Strategic Business Units (SBU ) has six attributes:
• A specific target market
• Its own senior marketing executive
• Control over its resources
• Its own marketing strategy
• Clear-cut competition
• Distinct differential advantages
Step Three in the Strategic Planning Process
3. Setting Marketing Objectives
Marketing objectives establish the firm’s goals for each SBU. Objectives are described in both quantitative terms (dollar sales, percentage profit growth, and market share), and qualitative terms (image, level of innovativeness, and industry leadership role).
Without clearly identified objectives, firms often fail.
Step Four in the Strategic Planning Process
4. Performing Situation Analysis
The situation analysis is known as
SWOT Analysis
• Internal factors include:•Strengths•Weaknesses
• External factors include:•Opportunities•Threats
The SWOT analysis is a continuous review of a firm’s market position.
Step Five in the Strategic Planning Process
5. Developing Marketing Strategy
A marketing strategy outlines the way in which the marketing mix is used to attract and satisfy the target market.
A separate strategy is necessary for each SBU.
Four strategic planning approaches are:
• Product/Market Opportunity Matrix
• Boston Consulting Group Matrix
• General Electric Business Screen
• Porter Generic Strategy Model
Boston Consulting Group Matrix (1)
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Relative Market Share
IndustryGrowthRate
High Low
Low
High
?
Relative Market Share
IndustryGrowthRate
H
H L
L
IntensifyMarketingEfforts toIncreaseShare
IntensifyMarketingEffortsor Leave Market
Use Profits to Aid Growing SBUs,Maintain Position
Reduce Efforts or Divest
Boston Consulting Group Matrix (1)
The Boston Group Approach
Growth share matrix is a portfolio planning method that evaluates a company’s strategic business units in terms of their market growth rate and relative shareStrategic business units are classified as:
• Stars• Cash Cows• Question marks• Dogs
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Stars are high-growth, high-share businesses or products requiring heavy investment to finance rapid growth. They will eventually turn into cash cows.
Cash cows are low-growth, high-share businesses or products that are established and successful SBUs requiring less investment to maintain market share
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Question marks are low-share business units in high-growth markets requiring a lot of cash to hold their share
Dogs are low-growth, low-share businesses and products that may generate enough cash to maintain themselves but do not promise to be large sources of cash
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Product/Market Opportunity Matrix (1)Market
Product
New
Present
Present New
MarketPenetration Strategy
MarketDevelopment Strategy
ProductDevelopment Strategy
Diversification Strategy
Product/Market Opportunity Matrix (2)Market
Product
New
Present
Present New
Expand sales of present products in current market by pricing, promotion, and distribution strategies
Seek greater sales of present products from new markets or new uses
Develop new or modified products to appeal to present market
Develop new products aimed at new markets
Companywide Strategic Planning: Defining Marketing’s Role
• Product/market expansion grid strategies• Market penetration• Market development• Product development• Diversification
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Developing Strategies for Growth and Downsizing
Market penetration is a growth strategy increasing sales to current market segments without changing the product
Market development is a growth strategy that identifies and develops new market segments for current products
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Product development is a growth strategy that offers new or modified products to existing market segments
Diversification is a growth strategy through starting up or acquiring businesses outside the company’s current products and markets
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Copyright Atomic Dog Publishing, 2001
General Electric Business ScreenIndustry Attractiveness
Co
mp
an
y B
us
ine
ss
Str
en
gth
s
Low
Medium
High
LowMediumHigh
Harvest/ Divest
Strategy
Selectivity/ Earnings Strategy
Invest/ Grow
Strategy
• Business Unit StrengthThe horizontal axis of the GE matrix is the strength of the business unit. Some factors that can be used to determine business unit strength include:
• Market share• Growth in market share• Brand equity• Distribution channel access• Production capacity• Profit margins relative to competitors• The business unit strength index can be calculated by
multiplying the estimated value of each factor by the factor's weighting, as done for industry attractiveness.
• Industry AttractivenessThe vertical axis of the GE matrix is industry attractiveness, which is determined by factors such as the following:
• Market growth rate• Market size• Demand variability• Industry profitability• Industry rivalry• Global opportunities• Macro environmental factors (PEST)
• Strategic ImplicationsResource allocation recommendations can be made to grow, hold, or harvest a strategic business unit based on its position on the matrix as follows:
• Grow strong business units in attractive industries, average business units in attractive industries, and strong business units in average industries.
• Hold average businesses in average industries, strong businesses in weak industries, and weak business in attractive industries.
• Harvest weak business units in unattractive industries, average business units in unattractive industries, and weak business units in average industries.
Cost Leadership Strategy
Differentiation Strategy
Cost Focus Strategy
Differentiation Focus Strategy
The Porter Generic Strategy Model
Competitive Advantage
Competitive Scope
Broad Target
Narrow Target
Lower Cost Differentiation
• Cost LeadershipIn cost leadership, a firm sets out to become the low cost producer in its industry. The sources of cost advantage are varied and depend on the structure of the industry. They may include the pursuit of economies of scale, proprietary technology, preferential access to raw materials and other factors. A low cost producer must find and exploit all sources of cost advantage. if a firm can achieve and sustain overall cost leadership, then it will be an above average performer in its industry, provided it can command prices at or near the industry average.
• 2. DifferentiationIn a differentiation strategy a firm seeks to be unique in its industry along some dimensions that are widely valued by buyers. It selects one or more attributes that many buyers in an industry perceive as important, and uniquely positions itself to meet those needs. It is rewarded for its uniqueness with a premium price.
3. Focus• The generic strategy of focus rests on the choice of a narrow
competitive scope within an industry. The focuser selects a segment or group of segments in the industry and tailors its strategy to serving them to the exclusion of others.The focus strategy has two variants.
(a) In cost focus a firm seeks a cost advantage in its target segment(b) differentiation focus a firm seeks differentiation in its target
segment. Both variants of the focus strategy rest on differences between a focuser's target segment and other segments in the industry. The target segments must either have buyers with unusual needs or else the production and delivery system that best serves the target segment must differ from that of other industry segments. Cost focus exploits differences in cost behaviour in some segments, while differentiation focus exploits the special needs of buyers in certain segments.
Step Six in the Strategic Planning Process
6. Implementing Tactical Plans
A tactical plan specifies the short-run actions (tactics) that a firm undertakes in implementing a given marketing strategy. It has three basic elements:
• Specific Tasks
• Time Frame
• Resource Allocation
Step Seven in the Strategic Planning Process
7. Monitoring Results
Monitoring results compares the actual performance of a firm, SBU, or product against the planned performance for a specified period.
Successful companies often employ the following strategies to assure success:
• Continuous monitoring of performance
• Regular use of proper strategy adjustments
• Maintenance of a customer-oriented focus
• Stressing positive written and oral communication among employees and channel members.
