Chapter 2 Strategic Market Planning-Marketing Management

8/2/2019 Chapter 2 Strategic Market Planning-Marketing Management

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Strategic Market Planning

2-1

Strategic

Market Planning

2Chapter


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Strategic market planning (also mentioned as Strategic Planningor Strategic Market-Oriented Planning, or Strategic Marketing Planning in

some texts) essentially refers to planning that is conceptually and

functionally long-term, typically covering a period of five years or more

for the entire corporation. Strategic market planning is a process

yielding a marketing strategy that is the framework for a marketing plan.


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Elements of Strategic Market Planning

Corporate Mission

Opportunities Objectives Resources

Corporate & SBU Strategy

Marketing Objectives

Marketing Strategies

Selection & Analysis of Target Markets

Marketing Mix Decisions


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Corporate Mission and ObjectivesFour planning activities are undertaken at corporate level:

1. Establishing Corporate Mission.

2. Establishing Corporate Objectives.

3. Establishing Strategic Business Units.

4. Resource Allocation to Strategic Business Units.


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Establishing Corporate MissionThe mission statement is a long-term view of what the corporation

wants to become. It describes the corporations values, aspirations and

reasons for being.


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Establishing Corporate Objectives Objectives provide direction to stay focused on common purpose.

Every activity is directed towards the objectives and every individual

contributes to accomplish the objectives.

Objectives coordinate the activities and keep them on the right track.They make behaviours in an organisation more rational and

coordinated and thus more effective.

Objectives serve as performance standards to compare actual results.

Objectives provide a basis for motivation of employees to be resultoriented because they know towards what ends they are working.


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Planning Corporate andStrategic Business Unit (SBU) Strategies

A Strategic Unit may be a division, a profit centre, a product line or a

number of related products, and in some cases a single product.


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Resource Allocation to Strategic BusinessUnits


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Boston Consulting Group (BCG) Approach

Growth-ShareMatrix developedby BostonConsulting Group

.

10%

StarsHigh

Question MarksMarket (Problem Children)

GrowthRate 5%

Cash Cows Dogs(Cash Traps)

Low

0

10x 8x 6x 4x 2x 1x 0.8x 0.6x 0.4x 0.2x 0

High LowRelative Market Share

8

3

5

7

2

6

9

4 1


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General Electric Approach

IndustryAttractiveness-BusinessStrength ModelDeveloped byGeneral Electric.

(1)

Investheavily

(2)Invest (3)Protect

Invest(4)

Protect(5)

Harvest(6)

(7)Protect

(8)Harvest

(9)Divest

High

Medium

Low

High Medium Low

MARKET

ATTRACTIVENESS

BUSINESS STRENGTH




Porters Generic Strategies

Porters Generic Strategies Model

High Lower Cost Cost LeadershipFocus or Differentiation

Differentiation

CompetitiveAdvantage

No DifferentiationNo Cost Leadership

No FocusLow

Narrow BroadTarget Competitive Scope Target




Cost LeadershipThe company targets a broad market and aims to become the lowest-

cost producer of a standard product and produces large quantities, then

prices it at a level that is less than the competitors prices.




DifferentiationStrategy of differentiation involves developing a competitive advantage

by offering a product that has broad appeal because, the product is

perceived as persuasively valuable and distinct by customers, perhaps

even unique in some way such as quality, innovative design, emotional

dimensions, service, etc.




FocusFocus strategy refers to accomplishing a competitive advantage in a part

of market to satisfy customer needs either through cost leadership or

differentiation by offering a low-priced product or a high-priced but highly

distinctive product.




Value Chain Analysis:Michael Porter views the totaleconomic system in an industry as a value creating system and should beused to identify ways and means to deliver more value to its customers.Every business is involved in designing (product development), producing(operations), marketing, delivering, and supporting its product.

Value Chain in a Company




Profit Impact of Market Strategy (PIMS)Profit Impact of Market Strategy is perhaps a novel approach to strategic

market planning and the development of competitive strategies. PIMS is

a research programme developed by Strategic Planning Institute (SPI).

Each business is a division, product line, or profit centre within its parent

company, selling a distinct set of products and/or services to an

identifiable group of customers, in competition with a well-defined set of

competitors, and for which meaningful separation can be made of

revenues, operating costs, investments, and strategic plans.

[The PIMS Programme(Cambridge, Mass: Strategic Planning Institute,

1980)].




Strategic Business Unit (SBU) StrategyAn important exercise undertaken by many businesses at this level is toconduct strengths, weaknesses, opportunities and threats (SWOT)analysis to spot the right opportunities to match the business units

strengths and also identify weaknesses and serious threats and their

likelihood of occurrence that may hamper the business units growthprospects.

The Four-Cell SWOT Matrix

CONVERT

Strength Weakness

MATCH

Opportunity Threat

CONVERT




Growth StrategiesIntensive Growth: Intensive growth strategies are appropriate whencurrent products and current markets show the potential for salesincrease. There are three main strategic options that seem to beappropriate to accomplish intensive growth:

1. Market Penetration.

2. Market development.

3. Product development.

Growth Strategies

PRODUCT

Current New

Current Market Product

penetration development

MARKET

Market DiversificationNew development




Diversification Growth

This strategy involves developing new products to be sold in new markets.

Diversification Strategies

Markets

Present Markets New Markets

Unrelated to Horizontal ConglomerateCurrent Products diversification diversification

New Products

Integrated ConcentricRelated to diversification

Current Products

diversification




Marketing Objectives and StrategyMarketing objectivesare determined on the basis of current business

analysis and specify what is to be accomplished through marketing

activities.

Marketing strategyrefers to actions for developing, pricing,distributing, and promoting products that meet the needs of specific

customer groups.


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Developing Marketing PlanA marketing plan is a formal written document, prepared detailing the

activities essential to implement the chosen marketing strategies.

Chapter 2 Strategic Market Planning-Marketing Management

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