Transcript No Slide Title

Dr. S. Borna
MBA 671
Objectives
Corporate and division strategic planing
 Business unit planning
 The marketing process
 Product level planning
 The marketing plan

A BRIEF HISTORY OF
MARKETING STRATEGY
By: Schnaars
The Free Press
Different Usage of the
Term
“Marketing Strategy”
Marketing Strategy at
Macro Level:
 Identification
of target
market(s) and designing
an appropriate marketing
mix for that market(s).
There are also
marketing element strategies:
For example: skimming vs.
penetration price strategies
Finally, Product-market Entry
Strategies
Historical Trends in
Marketing Strategy
1950s
1960s
1970s
1980s
Budgeting Search for
overall Corp. Strategy
Long Range Planning
Formula Planning
Strategic Thinking
Budgeting
No
explicit strategy
Emphasis on control
rather than strategy
An interest in integrating functions of
organization: production, finance,
marketing etc.
Key Characteristics of
Long-Range Planning
 Objectives
and Goals
 Long-Range Forecasting
Formula Planning
(1970s)
Decline of Formula Planning
Theoretical but
Impractical
Strategic Thinking
From
Forecasting to
Competitive Advantage
From elitism to
egalitarianism
•From competitors to
competitors and
consumers
•From calculation to
creativity
What is competitive Advantage?
Competitive advantage is something that allows a firm to earn
higher-than-average profits
What is Strategy?
The art and science of
adapting and coordinating
resources to the attainment
of an objective.
Three Recurring
Themes
Environmental
analysis
Firm’s resources
Objective and goals
Adapted To
Resources
Opportunity
To Attain
Objectives
A company can outperform
rivals only if it can establish
a difference that it can
preserve.
The essence of strategy is
choosing to perform
activities differently than
rivals do.
According to Porter
(HBR 1996)
Strategy is the creation of a
unique and valuable position,
involving a different set of
activities.
Strategic Positions
Can Be Based On:
1. Variety-based Positioning
ex. Jiffy Lube
2. Needs-based Positioning
(segmentation) ex. Ikea
3. Etc.
Porter’s Main Points:
1. Distinguish between
Operational efficiency and
strategy
2. Identify a unique strategic
position
3. Consider trade-offs (do not be
Jack of all trades.)
4. Strategic positions should
have a horizon of a decade or
more.
Strategic-Planning, Implementation,
and Control Process
Planning
Corporate
planning
Implementation
Organizing
Division
planning
Business
planning
Product
planning
Control
Measuring
results
Diagnosing
results
Implementing
Taking
corrective
action
Corporate Headquarters
Planning
Strategic Planning at the
Corporate Level Consists of :
 Defining Corporate Mission
 Defining Corporate
Objectives
Strategic Planning
(Cont.)
 Corporate
Development
Strategy (growth strategies)
downsize older businesses as well.
 Allocating
Corporate
Resources (corp. portfolio
evaluation & strategy)
FACTORS THAT
INFLUENCE THE
CORPORATE MISSION
 ENVIRONMENTAL
FACTORS
 ORGANIZATIONS PAST
HISTORY
 MANAGEMENT
PREFERENCE
DEFINING THE
ORGANIZATION’S MISSION
 WHAT
BUSINESS(ES) ARE WE
IN?
 WHAT BUSINESS(ES) SHOULD
WE BE IN?
 HOW TO ALLOCATE OUR
RESOURCES AMONG
DIFFERENT UNITS?
CRITERIA FOR DEFINING
THE CORPORATE MISSION
Target
customers and
Markets
Principle Products or
Services
Geographic Domain
CRITERIA FOR DEFINING
THE CORPORATE MISSION
•Core Technologies
•Concern for Survival, Growth
and profitability
•Public Image
• etc.
A MISSION STATEMENT
To provide low-cost personal
motorized transportation for
low- to moderate income
consumers through providing
small cars designed with
most fuel-efficient
technology.
An Excellent mission statement by Toyota:
Beat the Mercedes Benz!
What is unique about the above
mission statement
COMPANY OBJECTIVES:
MEASURES OF PERFORMANCE
EXAMPLE:
To realize an average
return of 15% on
investment over the next
five years.
Objectives and Strategies
Objectives
are ends
strategies are means of
achieving these ends.
The Strategic-Planning Gap
Desired
sales
Diversification growth
Strategicplanning
gap
Sales
Integrative growth
Intensive growth
Current
portfolio
0
5
Time (years)
10
Planning New Business
(Growth Strategies)
Current
Markets
New
Markets
Current Product
New Product
Market
Penetration
Strategy
Product
Development
Strategy
Market
Development
Strategy
(Diversification
Strategy)
Intensive Growth Strategies
Corporate Growth Strategies
Integrative Growth
1. Backward Integration
2. Forward Integration
3. Horizontal Integration
Corporate Growth
Strategies
Diversification Strategies
1. Concentric
Diversification (technological
synergy)
2. Horizontal Diversification
3. Conglomerate
Diversification
Resource Deployment Strategies
Allocating Resource Among
Strategic Business Units
Market Growth Rate
The Boston Consulting Group’s
Growth-Share Matrix
20%18%16%14%12%10%8%6%4%2%0
Stars
Question marks
4
3
5
?2
?
1
Dogs
Cash cow
8
6
10x
7
4x
2x 1.5x
1x
.5x .4x .3x .2x .1x
Relative Market Share
LIMITATIONS OF BCG
METHOD
1. INTERDEPENDENCE AMONG SBU’S;
2. MARKET GROWTH RATE AS A PROXY
MEASURE OF INDUSTRY
ATTRACTIVENESS IS INADEQUATE;
3. RELATIVE MARKET SHARE AS PROXY
MEASURE OF COMPETITIVE STRENGTH
IS INADEQUATE.
LIMITATIONS OF BCG
METHOD (CONTINUED)
 CLASSIFICATION
IS
SENSITIVE TO
VARIATIONS IN HOW
“GROWTH” & “SHARE”
ARE MEASURED.
MARKET ATTRACTIVENESS
Low Medium High
Market Attractiveness: CompetitivePosition Portfolio Classification
Strong
BUSINESS STRENGTH
Medium
5.00
5.00
3.67
2.33
Weak
1.00
Joints
Aerospace
fittings
Hydraulic
pumps
3.67
Clutches
2.33
Flexible
diaphragms
Fuel
pumps
Relief
valve
1.00
Invest/grow
Selectivity/earnings
Harvest/divest
MARKET ATTRACTIVENESS







Annual market growth rate
Historical profit margin
Competitive intensity
Technological requirements
Inflationary vulnerability
Overall market size
Energy requirements
Environmental impact
 Social/political/legal
Note
COMPETITIVE POSITIONS


Note





Market share
Share growth
Product quality
Brand reputation
Distribution
network
Promotional
effectiveness
Unit cost
Material
supplies
 R&D
performance
 Managerial
personnel

Strategic Business Unit
1. It is a single business or
collection of related
businesses
2. It has a distinct mission
3. It has its own competitors
SBU Cont.
4. It has a responsible manager
5. It can benefit from strategic
planning
6. It can be planned
independently of other
businesses
The Business Unit
Strategic Process
Business Mission
 Environmental Analysis
 Goal Formulation
 Strategy Formulation
 Program Formulation
 Implementation
 Feedback and Control

Opportunity Matrix
Attractiveness
Success Probability
High
Low
High
1
2
Low
3
4
Opportunities
1. Company develops a more
powerful lighting system
2. Company develops a
device for measuring the
energy efficiency of any
lighting system
3. Company develops a
device for measuring
illumination level
4. Company develops a
software program to teach
lighting fundamentals to TV
studio personnel
Threat Matrix
Seriousness
Probability of Occurrence
High
Low
High
1
2
Low
3
4
Threats
1. Competitor develops a
superior lighting system
2. Major prolonged
economic depression
3. Higher costs
4. Legislation to reduce
number of TV studio
licenses
The Marketing Plan
Executive Summary & Table of Contents
Current Marketing Situation
Opportunity & Issue Analysis
Objectives
Marketing Strategy
Action Programs
Projected Profit-and-loss
Controls
Factors Influencing Company
Marketing Marketing Strategy
intermediaries
Demographic/
economic
environment
Technical/
physical
environment
Product
Suppliers
Place
Target Price
customers
Publics
Promotion
Political/
legal
environment
Social/
cultural
environment
Competitors
Steps in the Planning Process:
Analyzing Market Opportunities
Winning Markets through market-oriented
strategic planning (chapter 4)
Marketing Information system (chapter 5)
Scanning Marketing environment (chapter 6)
Understanding consumer and business
markets (chapters 7 and 8)
Dealing with the competition (chapter 9)
Segmentation and selecting target market(s)
chapter 10)
Developing Marketing Strategies
Developing a positioning strategy (ch. 11)
New product development (ch. 12)
Impact of global markets on the strategy
(chapter 13)
Shaping the Market Offering
Product decisions (chapter 14)
Designing and Managing Services (15)
Price decisions (chapter 16)
Managing Marketing Programs
Marketing Channels (chapters 17-18)
Promotion decisions (chapters 19-21)
Managing the total Marketing effort (Ch. 22)
Review
Corporate and division strategic planing
 Business unit planning
 The marketing process
 Product level planning
 The marketing plan
