Company and Marketing Strategy

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Company and Marketing Strategy
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Preview CaseDisney What are its challenges?

• Originally known for films, animation, theme
  parks.
• Satisfying the customer is everyones job.
• Mission make people happy make a dream come
  true!
• Disney has grown via diversification.

• Discussion Questions
• Has Disney grown too large?
• Will consumers accept new Disney businesses?

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Strategic Marketing Planning

• Companies should look ahead and develop long-term
  strategies g to meet changing conditions in their
  industries and ensure long-term survival
• The task of selecting an overall company strategy
  for long-run survival and growth g strategic
  planning
• Marketings key role in strategic planning

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Formal Planning

• Benefits of formal plans
• Encouraging management to think ahead
  systematically.
• Forcing managers to clarify objectives and
  policies.
• Better coordination of company efforts.
• Clearer performance standards for control.
• Helping the company to anticipate and respond
  quickly to environmental changes and sudden
  developments.

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What is Strategic Planning?

• Strategic Planning defined
• The process of developing and maintaining a
  strategic fit between the organizations
  resources, goals and capabilities and its
  changing market opportunities.

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Strategic Planning

• It sets the the stage for the rest of the
  planning in the firm
• The aim g to shape and reshape companys
  businesses and products in order to reach to
  targeted profits and growth.
• Top-management job!
• Part of a broader process strategic management

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Strategic Planning

• Organizational levels subject to strategic
  planning
• Corporate level
• Division level
• Business unit level
• Product level

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Strategic Planning, Implementation, and Control
Process
Planning
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Steps in Strategic Planning
Business unit, product, and market level
Corporate Level
Planning marketing and other functional strategi
es
Setting Company Objectives and Goals
Defining the Company Mission
Designing the Business Portfolio
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Market-Oriented Mission

• Fundamental questions
• What is our business?
• Who is the customer?
• What do consumers value?
• What should our business be?

• A clear mission statement
• A statement of the organizations purpose ---
  what it wants to accomplish in the larger
  environment
• Acts as invisible hand that guides employees to
  work toward realizing the organizations goals.

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Company Mission

• Each companys mission is shaped by five
  elements
• History
• Current preferences of the owners and management
• The market environment
• Resources
• Distinctive competences

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Company Mission (cont.)
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Company Mission (cont.)

• Market-oriented definitions of a business g
  better than product or technological definitions
  (see page 38)
• A market-oriented mission statement g defines the
  business in terms of satisfying basic customer
  needs
• Mission statement g must avoid being too narrow
  or too broad
• Mission statement g to be guided by a vision -
  an almost impossible dream that provides a
  direction for the company for the next 10 to 20
  years

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Company Mission (cont.)
Characteristics of a Good Mission Statement
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Company Goals and Objectives

• Companys mission g needs to be turned into
  detailed, supporting objectives for each level of
  management
• Mission g hierarchy of objectives
• As specific as possible
• Marketing strategies g must be developed to
  support these marketing objectives

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Hierarchy of Objectives
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The Business Portfolio

• Business portfolio g collection of businesses and
  products that make up the company
• Business portfolio planning involves 2 main
  steps
• Analyzing the current business portfolio and
  decide which business should receive more, less
  or no investment
• Shaping the future portfolio by developing growth
  strategies to add new products/businesses to the
  current portfolio

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Analyzing the Current Business Portfolio

• Portfolio Analysis g to identify and evaluate the
  various businesses that make up the company
• To identify key businesses g Strategic Business
  Units - SBU
• SBU unit of the company (separate mission and
  objectives / can be planned independently from
  other company businesses)
• To assess the attractiveness of its various SBUs
  and decide how much support each deserves

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Boston Consulting Groups Growth-Share Matrix
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Boston Consulting Groups Growth-Share Matrix

• Question Marks
• High growth, low share
• Build into Stars or phase out
• Require cash to hold
• market share

• Stars
• High growth share
• Profit potential
• May need heavy
• investment to grow

?
Market Growth Rate Low High

• Cash Cows
• Low growth, high share
• Established, successful
• SBUs
• Produce cash

• Dogs
• Low growth share
• Low profit potential

Relative Market Share High
Low
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Analyzing the Current Business Portfolio

• After the classification of its SBUs g to
  determine what role each will play in the future

• Build
• Increase market share
• Works well for question marks
• Hold
• Preserve market share
• Good for cash cow

• Harvest
• Increases short-term cash flow
• Good for weak cash cows, question marks and dogs
• Divest
• Sell or liquidate
• Good for dogs and question marks

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Problems With Matrix Approaches
Can be Difficult, Time-Consuming, Costly to
Implement
Difficult to Define SBUs Measure Market Share/
Growth
Focus on Current Businesses provide little
advice for future planning
Can Lead to Unwise Expansion or Diversification

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Growth Strategies - Ansoffs Product / Market
Expansion Grid
4. Diversification
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Growth Strategies

• Making more sales to current customers without
  changing its products.
• Add new stores in current market areas,
• improve advertising, prices, service or store
  design.

Existing products
New products
Market penetration
Product development
Existing markets
Market development
Diversifica-tion
New markets
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Growth Strategies

• Develop new markets for current products
• Identify new demographic or geographic markets
• Domestic or international

Existing products
New products
Market penetration
Product development
Existing markets
Market development
Diversifica-tion
New markets
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Growth Strategies

• Offering modified or new products to current
  markets.
• New styles, flavors, colors, or modified products

Existing products
New products
Market penetration
Product development
Existing markets
Market development
Diversifica-tion
New markets
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Growth Strategies
Existing products

• New products for new markets.
• Start up or buy new businesses

New products
Market penetration
Product development
Existing markets
Market development
Diversifica-tion
New markets
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Downsizing

• Some reasons that a company might want to abandon
  products or markets
• The market environment might change (making some
  of the companys product or markets less
  profitable e.g. economic recession)
• The company may have grown too fast or entered
  areas where it lacks experience
• Some of the companys products or business units
  age and die.

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Functional Planning

• The companys overall strategic plan g
  establishes what kind of businesses the company
  will be in future its objectives for each
  business.
• More detailed planning must take place within
  each business unit
• The major functional departments in each unit g
  must work together to accomplish strategic
  objectives
• Marketing plays a key role

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Marketings Key Role in Strategic Planning

• Provide a guiding philosophy
• Identify attractive opportunities
• Design effective strategies
• Build strong value chains
• Form superior value delivery networks

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Marketings Key Role Partner Relationship
Management

• Partner relationship management
• working closely with partners in other
  departments (to form an effective value chain
  that serves the customer), and
• partnering effectively with other companies in
  the marketing system for a superior value
  delivery network to jointly bring greater value
  to customers

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Marketings Key Role Partner Relationship
Management

• Each department in the company g as a link in the
  companys value chain
• Each dept.carries out value-creating activities
• The companys overall success g depends also on
  how well the activities of various dept. are
  coordinated
• Departmental relations are full of conflicts
• Marketers must find ways to get all dept. to
  think consumer and to develop a smoothly
  functioning value chain

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Marketings Key Role Partner Relationship
Management

• The company needs to look beyond its own value
  chain in order to create customer value
• Value-delivery network g network made up of the
  company, suppliers, distributors, and customers
  who partner with each other to improve the
  performance of the entire sytem
• Competition today takes place between the entire
  value delivery networks!

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Business Unit Strategic Planning
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Business Unit Strategic Planning

• Business Mission g each SBU needs to define its
  specific mission within the broader company
  mission
• External Environment Analysis g to build a MIS to
  monitor
• Key external macroenvironment forces
• Significant microenvironment actors
• Trends and important developments g to identify
  the associated opportunities and threats

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Business Unit Strategic Planning

• Internal Environment Analysis g Each business
  needs to evaluate its internal strengths and
  weaknesses periodically
• Checklist for Performing Strengths/Weaknesses
  Analysis
• Management or an outside consultant g reviews the
  businesss marketing, financial, manufacturing
  and organizational competencies and rates each
  factor as strength or weakness
• SWOT ANALYSIS

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Business Unit Strategic Planning /Example of a
Checklist
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Business Unit Strategic Planning

• Goal Formulation (Goals g objectives that are
  specific with respect to magnitude and time)
• Turning objectives g into measurable goals g
  facilitates management planning, implementation
  and control
• Most businesses pursue a mix of objectives
• Objectives must be arranged hieararchically from
  the most to the least important
• should be stated quantitatively whenever possible
  (e.g .increase the ROI to 15 within two years)
• should be realistic
• should be consistent

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Business Unit Strategic Planning

• Strategy Formulation
• Strategy g A game plan for how to reach goals
  (while goals indicating what a business unit
  wants to achieve)
• 3 general type of strategy
• Cost Leadership g to achieve the lowest
  production and distribution costs / to price
  lower than its competitors and win a large market
  share
• Differentiation g to concentrate on achieving
  performance in an important customer benefit area
  valued by a large part of the market
• Focus g on one or more narrow market segments
  rather than going after a large market

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The Marketing Process

• Planning at the corporate, division and business
  levels g integral part of the marketing process
• Marketing Process (definition) g
• consists of analyzing mktg opportunities,
  selecting target markets, developing the mktg
  mix, and managing the mktg effort

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The Marketing Process
Demographic- Economic Environment
Technological- Natural Environment
Marketing Intermediaries
Publics
Suppliers
Political- Legal Environment
Social- Cultural Environment
Competitors
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The Marketing Process (cont.)

• Analyzing marketing opportunities
• Researching and selecting target markets
• Designing marketing strategies
• Planning marketing programs
• Organizing, implementing, controlling the
  marketing effort

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The Marketing Process (cont.)

• Analyzing marketing opportunities
• A reliable marketing and information system
• To evaluate consumer wants and behavior
• To assess market size
• To gather information about the marketing
  environment
• To understand consumer markets, business markets
  and their behaviors
• To monitor competitors

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The Marketing Process (cont.)

• Researching and selecting target markets
• To divide the market into specific segments
• To evaluate each segment and choose market
  segments to be served best
• To develop a clear position relative to
  competitors in the minds of consumers

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Strategy

• Customers grouped by
• Geographic
• Demographic
• Psychographic
• Behavioral
• Market segment is a groups of consumers who
  respond in similar ways to marketing efforts.

• Market Segmentation
• Target marketing
• Market Positioning

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Strategy

• Evaluation of each segments attractiveness
• Selection of segments with greatest long-term
  profitability
• A company can choose one or several segments to
  target

• Market Segmentation
• Target marketing
• Market Positioning

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Strategy

• The place the product occupies in the consumers
  mind
• Products are positioned relative to competing
  products
• Marketers look for clear, distinctive and
  desirable place in positioning

• Market Segmentation
• Target marketing
• Market Positioning

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The Marketing Process (cont.)

• Designing marketing strategies for competitive
  advantage
• Market leader strategies
• Market challenger strategies
• Market follower strategies
• Market nicher strategies

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The Marketing Process (cont.)

• Planning marketing programs
• Decisions on
• Marketing expenditures
• Marketing mix 4Ps
• Marketing budget allocation
• The marketing mix includes controllable and
  tactical marketing tools known as the 4Ps
• The 4Ps include
• Product
• Place
• Promotion
• Price

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The Marketing Process (cont.)

• Managing the marketing effort
• Marketing Analysis
• Marketing Planning
• Marketing Implementation
• Marketing Control

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Managing the Marketing Effort
Marketing Functions

• Finding opportunities the company must analyze
• its market mktg environment
• company strengths weaknesses
• current and possible mktg actions
• Avoiding threats
• Understanding strengths
• Analyzing weaknesses

• Analysis
• Planning
• Implementation
• Control

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Managing the Marketing Effort
Marketing Functions

• Marketing plans include
• Executive summary
• Analysis of current situation
• Objectives
• Targets and positioning
• Marketing mix
• Budget
• Controls

• Analysis
• Planning
• Implementation
• Control

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Marketing Planning

• Through strategic planning g the company decides
  what it wants to do with each business unit
• Marketing planning g involves deciding on
  marketing strategies that will help the company
  reach its strategic objectives
• Marketing plan g 2 levels
• Strategic mktg plan g develops the broad mktg
  objectives and strategy based on an analysis of
  the current market situation and opportunities
• Tactical mktg plan g outlines specific mktg
  tactics, including advertising, merchandising,
  pricing, channels, service, etc.

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Contents of a Marketing Plan
Executive Summary Table of Contents
Current Marketing Situation
Threats and Opportunity Analysis
Objectives and Issues
Marketing Strategy
Action Programs
Budgets
Controls
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Managing the Marketing Effort
Marketing Functions

• The process that turns mktg plans into mktg
  actions in order to achieve strategic mktg
  objectives
• Deals with who, where, when, how (while
  mktg planning dealing with what and why)
• Companies can gain competitive advantages through
  effective implementation

• Analysis
• Planning
• Implementation
• Control

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Managing the Marketing Effort
Marketing Functions

• Evaluation of the results of marketing strategies
• Checks for differences between goals and
  performance

• Analysis
• Planning
• Implementation
• Control

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Measuring Effectiveness

• Return on marketing (marketing ROI)
• The net return from a marketing investment
  divided by the costs of the investments

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Marketing Implementation
Marketing Analysis of Companys Situation
Control
Marketing Planning Develop Strategic Plans
Develop Marketing Plans
Marketing Implementation Carry
Out The Plans

Measure Results
Evaluate Results
Take Corrective Action