Prof.YU Hongyan JLU PowerPoint by Yu Hongyan Business School of Jilin University Chapter 4 Winning Markets Through Strategic Planning, Implementation,

Prof.YU Hongyan JLU

PowerPoint by Yu HongyanBusiness School of Jilin University

Chapter 4

Winning Markets Winning Markets Through Strategic Through Strategic

Planning, Planning, Implementation, Implementation,

and Controland Control

Strategic-Planning, Implementation, and Control Process

Measuringresults

Diagnosingresults

Takingcorrective

action

ImplementationImplementationPlanningPlanning

Corporateplanning

Divisionplanning

Businessplanning

Productplanning

Organizing

Implementing

ControlControl

Prof.YU Hongyan JLU

Objectives

1. CORPORATE AND DIVISION STRATEGIC PLANNING

2. BUSINESS STRATEGY PLANNING

3. THE MARKETING PROCESS4. MANAGING MARKETING

PROCESS

Prof.YU Hongyan JLU

1. CORPORATE AND DIVISION STRATEGIC PLANNING

1.1 Defining the Corporate Mission1.2 Establishing Strategic Business Unit

s (SBUs)1.3 Assigning Resources to SBUs1.4 Planning New Businesses, Downsizi

ng Older Businesses

Prof.YU Hongyan JLU

1. CORPORATE AND DIVISION STRATEGIC PLANNING (cont’d)

1.1Corporate Mission Peter Drucker

What is our business? Who is our customer? What is of value to the customer? What will our business be? What should our business be?

Prof.YU Hongyan JLU


1.1 Corporate Mission Good Corporate Mission

Limited number of goals Stress major policies & values Define competitive scopes

For more than 50 years, Our Credo has helped us in fulfilling our responsibilities to customers, employees, communities and stockholders.

The mission of Southwest Airlines is dedication to the highest quality of Customer Service delivered with a sense of warmth, friendliness, individual pride, and Company Spirit.

To Our Employees…..

Prof.YU Hongyan JLU


PepsiCo’s Mission Statement “PepsiCo’s overall mission is to increase the value of our s

hareholders’ investment. We do this through sales growth, cost controls and wise investment of resources. We believe our commercial success depends upon offering quality and value to our consumers and customers; providing products that are safe, wholesome, economically efficient and environmentally sound; and providing a fair return to our investors while adhering to the highest standards of integrity.”

http:\\www.pepsico.com

Prof.YU Hongyan JLU


Motorola To honorably serve the needs of the community by

providing products and services of superior quality at a fair price to our customers;

to do this so as to earn an adequate profit which is required for the total enterprise to grows;and by so doing provide the opportunity for our employees and shareholders to achieve their reasonable personal objectives

Prof.YU Hongyan JLU

Discussion Scenario

Critique the following hypothetical mission statement.

“The overall mission of KDT is to provide cutting edge Internet services to consumer and business clients, while increasing the value of our shareholder’s investment.”中国建设银行 , 建设美好生活中国移动 : 沟通从心开始

Prof.YU Hongyan JLU


1.2 Establish Strategic business units (SBUs) A business can be defined in terms of thr

ee dimensions Customer group Customer needs Technology

Derek Abell(1980) Defining the Business based on customer group, customer needs and technology. It is customer satisfying process not a goods producing process

Technology

Customer group

Customer need

空调通风

供暖照明

蜡烛白炽灯

日光灯电视制作室

家庭

工厂

办公室


Company Product Definition Market Definition

Missouri-pacific railroad

We run a railroadWe are a people and goods mover

XeroxWe make a copying equipment

We help improve office productivity

Standard Oil We sell gasoline We supply energy

Columbia picture We make movie We market entrainment

Encyclopedia Britannica

We sell encyclopedias We distribute information

Carrier We make air condition and furnaces

We provide climate control in the home

Prof.YU Hongyan JLU


1.2 Establish Strategic business units (SBUs) SBUs share three characteristics:

Single business or collection of businesses which can be managed separately

Has own set of competitors Has manager responsible for strategic planni

ng and profits

Prof.YU Hongyan JLU


1.3 Assigning Resources to SBUs

Common Tools Philosophy

Market Share

Profitability

Portfolio Matrix

$$$$

Prof.YU Hongyan JLU


1.3 Assigning Resources to SBUsThe Boston Matrix

The Boston Matrix is a well known tool for the marketing manager

It was developed by The Boston Consulting Group (BCG)

It is an approach to product or business portfolio planning

It has two controlling aspect namely relative market share (meaning relative to your competition) and market growth

BCG Portfolio MatrixRelative market share

high 1 low

Mar

ket

Gro

wth

Rat

e

low

1

0

h

igh

High growthMarket leaders Require cash

Low growth

High market shareHigh cash flow

Low growthLow market shareMinimal cash flow

High growth

Low market shareNeed cash

Poor profit margins

$$$$

Discussion Scenario

手提电脑(STAR)

Palmtop 掌上型电脑

(PROBLEM CHILD)

PC(CASH COW)

Mainframe 主机

Computer(DOG)

Mar

ket

gro

wth

rat

e

LO

W

H

IGHRelative market share

HIGH LOW

The Boston Consulting Group’s Growth-Share Matrix

20%-20%-18%-18%-16%-16%-14%-14%-12%-12%-10%-10%- 8%-8%- 6%-6%- 4%-4%- 2%-2%- 00

Mar

ket

Gro

wth

Rat

e

3 ?Question marks

? ??2

1

Cash cow

6

Dogs

8

710x 4x 2x 1.5x 1x 10x 4x 2x 1.5x 1x

Relative Market Share.5x .4x .3x .2x .1x .5x .4x .3x .2x .1x

Stars

5

4

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The Boston Matrix

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Life cycle

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BuildBuild

HoldHold

HarvestHarvest

Divest 剥夺Divest 剥夺

Aim is to increase market share, Provide financial resources if SBU (Problem Child) has potential to be a Star.

Aim is to preserve market share if SBU is a successful Cash Cow. Use cash flow for other SBUs.

Aim is to Increase short-term cash return. Appropriate

for all SBUs except Stars.

Get rid of SBUs with low shares in low-growth markets.appropriate for dog and question

Market Attractiveness Matrix (GE)

BUSINESS STRENGHSTRONG

MA

RK

ET

AT

TR

AC

TIV

EN

ES

S

LO

WM

ED

IUM

HIG

HMEDIUM WEAK

Low Attractiveness

Medium Attractiveness

High Attractiveness


MA

RK

ET

AT

TR

AC

TIV

EN

ES

SM

AR

KE

T A

TT

RA

CT

IVE

NE

SS

5.005.00

3.673.67

2.332.33

1.001.00

Lo

wL

ow

Med

ium

Med

ium

Hig

hH

igh

Reliefvalve

Flexiblediaphragms

Fuelpumps

Aerospacefittings

Clutches

Hydraulicpumps

Joints

StrongStrong MediumMedium WeakWeakBUSINESS STRENGTHBUSINESS STRENGTH

1.001.002.332.333.673.675.005.00

Invest/growInvest/grow Selectivity/earningsSelectivity/earnings Harvest/divestHarvest/divest

Protect positionInvest to grow of maximum digestible rateConcentrate effort on maintaining strength

Invest to buildChallenge for leadershipBuild selectively on strengthsReinforce vulnerable areas

Build selectivelySpecialize around limited strengthsSeek ways to overcome weaknessesWithdraw if indications of sustainable growth

Build selectivelyInvest heavily in most attractive segmentsBuild up ability to counter competitionEmphasize profitability by raising productivity

Selectively/manageProtect existing programConcentrate investments in segments where profitability's good and risks are relatively low

Limited expansion or harvest

Look for ways to expand without high risk;otherwise, minimize investment and rationalize operations

Protect and refocusManage for current earningsConcentrate on attractive segmentsDefend strengths

Manage for earningsProtect position in most profitable segmentsUpgrade product lineMinimize investment

Divest Sell at time that will maximize cash valueCut fixed costs and avoid investment meanwhile

highL

owM

edium

Strong Medium Weak

Prof.YU Hongyan JLU


1.3 Assigning Resources to SBUs Attributes of Market Attractiveness

High profitabilityRapid growthLack of government regulationInsensitivity to price increaseLack of competitionAvailability of technology

Prof.YU Hongyan JLU


1.3 Assigning Resources to SBUs Business Strength Market share

Share growth Product quality Brand reputation Distribution network Promotional effectiveness Productive capacity

Prof.YU Hongyan JLU


1.3 Assigning Resources to SBUs Critique of Portfolio Models

+help managers think more strategically +understand the economics of their business

better +improve the quality of their plans +Improve communication between B&C +Pinpoint the information gap +Eliminate weaker business and strengthen

Prof.YU Hongyan JLU


1.3 Assigning Resources to SBUs Portfolio models must be used cautiously

-too much emphasis on market share growth -sensitive to the rating and weights

Prof.YU Hongyan JLU


1.4 Planning New Businesses and Downsizing Old Businesses Identify opportunities to achieve further

growth within the company current business –intensive growth opportunity

Build business that are related to the company current business-integrative growth

Add attractive business that are unrelated to the company current business-diversification growth

Sal

esS

ales

10105500Time (yearsTime (years)

The Strategic-Planning Gap

Desiredsales

Desiredsales

Integrative growth

Intensive growth

CurrentportfolioCurrentportfolio

Strategic-Strategic-planningplanning

gapgap

DiversificationDiversification growthgrowth

Three Intensive Growth Strategies: Ansoff’s Product/Market Expansion Grid

4. Diversification2. Marketdevelopment

Newmarkets

1. Marketpenetration

Existingmarkets

Existingproducts

3. Productdevelopment

Newproducts

Prof.YU Hongyan JLU

Review- 1. CORPORATE AND DIVISION STRATEGIC PLANNING

1.1 Defining the Corporate Mission1.2 Establishing Strategic Business Unit

s (SBUs)1.3 Assigning Resources to SBUs1.4 Planning New Businesses, Downsizi

ng Older Businesses

Prof.YU Hongyan JLU

2. BUSINESS STRATEGIC-PLANNING

Figure 4-4: The Business Strategic-Planning Process

Prof.YU Hongyan JLU

2. BUSINESS STRATEGIC-PLANNING (cont’d)

2.1 Business Mission

Prof.YU Hongyan JLU


2.2 SWOT Analysis

Opportunities and threats stemming from the external environment

Internal strengths and weaknesses

Monitor key forces for trends Macro environment,

and microenvironment

For each trend, conduct an MOA - Marketing Opportunity Analysis

1

4

2

3

HighHigh

LowLow

HighHigh LowLow

Att

ract

iven

ess

Att

ract

iven

ess

Success ProbabilitySuccess Probability OpportunitiesOpportunities

Opportunity Matrix

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

1.Competitor develops a superior lighting system

2.Major prolonged economic depression

3.Higher costs4.Legislation to reduce

number of TV studio licenses

1

4

2

3

HighHigh

LowLow

HighHigh LowLow

Ser

iou

snes

sS

erio

usn

ess

Probability of OccurrenceProbability of Occurrence ThreatsThreats

Prof.YU Hongyan JLU


2.2 SWOT Analysis

Opportunities and threats stemming from the external environment

Internal strengths and weaknesses

Brand awareness, image, reputation

Distribution, pricing, customer loyalty, product benefits

Finance, R&D, manufacturing

营销1 ，企业声誉2 ，市场份额3 ，顾客满意4 ，顾客维持5 ，产品质量6 ，服务质量7 ，定价有效性8 ，分销有效性9 ，促销有效性10 ，销售人员有效性11 ，创新效果12 ，地理覆盖范围

itemperformance

特强稍强中间稍弱特弱weight

high middle low

进行优劣势分析的检查表

（续〕

财务13 ，资金成本或有效性14 ，现金流15 ，财务稳健性制造16 ，设备17 ，规模经济性18 ，生产能力19 ，技能和奉献型工人20 ，准时生产交货能力21 ，技术和制造工艺组织22 ，远见卓识的领导23 ，能奉献的员工24 ，创业导向25 ，柔性或反应能力

项目绩效特强稍强中间稍弱特弱

weight高中低

Prof.YU Hongyan JLU


Must be Stated Quantitatively

Must be Hierarchical

Must be Consistent

Must be Realistic

2.3 Goal Formulation Effective Goals:

Trade-off

Prof.YU Hongyan JLU


Discussion Scenario

Effective Goals: Critique the following objectives: Our objectives are to . . . 1) better serve customers. 2) be the best we can be. 3) increase market share. 4) maximize shareholder wealth.

Prof.YU Hongyan JLU


2.3Goal Formulation

“Our objective is to increase market share by 40% and to obtain customer satisfaction

ratings of at least 90% in 2001.”

Prof.YU Hongyan JLU


Differentiation

Porter’s GenericStrategies

Focus

Overall cost leadership

2.4 Strategy FormulationA plan of action resulting from strategy or intended to accomplish

a specific goal

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2.5 Program formulation and program implementation involves: Developing supporting programs Estimating implementation costs Carefully managing the details so

great strategy isn’t ruined by poor implementation

Prof.YU Hongyan JLU


2.6 Feedback and control Do the right thing(effectiveness) To do things right(efficiency) Do the right thing than to do thing

right

首先要做对 , 然后是做好

Prof.YU Hongyan JLU

3. THE MARKETING PROCESS 3.1 The Value-Delivery Sequence

Traditional physical process sequence Value creation and delivery sequence

Sell the product

3.1 The Value-Delivery Process

Make the product

ProcureDesignproduct Make Price Sell Advertise/

promote Distribute Service

Choose the Value Provide the Value Communicate the Value

(a) Traditional physical process sequence

(b) Value creation & delivery sequence

Strategic marketing Tactical marketing

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3. THE MARKETING PROCESS (cont’d)

Figure 4-5: Two Views of the Value-Delivery Process

Prof.YU Hongyan JLU


Managing the Marketing Effort

Planning Marketing Programs 4ps

Developing Marketing Strategies STP

Analyzing Marketing Opportunities

3.2 Steps in the Marketing Process:

Competitors

Marketingintermediaries

PublicsSuppliers

Factors Influencing Company Marketing Strategy

Mar

ketin

g

info

rmat

ion

syst

em

Marketing

planningsystem

Marketing

organization

system Mar

ketin

g

orga

niza

tion

and

impl

emen

tatio

n

Product

Promotion

Place PriceTargetcustomers

Demographic/Demographic/economiceconomic

environmentenvironment

Social/Social/culturalcultural


Technical/Technical/physicalphysical


Political/Political/legallegal


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Executive summary and Table of Contents

Current situation Opportunity and issue

analysis Objectives

Marketing strategy

Action programs Financial

projections Controls

3.3 Product-Marketing Plan Contents

It is very important

Prof.YU Hongyan JLU

4. Managing the Marketing Process

4.1 Organization of the marketing department

4.2 Building a company wide marketing orientation

4.3 Marketing implementation4.4 Evaluating and controlling the

marketing process

Prof.YU Hongyan JLU

We don’t learn this parts because it is too much for us

Prof.YU Hongyan JLU

Managing the Marketing Process

1.Methods of Organizing the Marketing Department

Customers or MarketsCustomers or Markets

Corporate DivisionsCorporate Divisions

Products or BrandsProducts or Brands

Geographic AreaGeographic Area

Global AspectsGlobal Aspects

FunctionFunction

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Functional organization Marketing vice

president Sale manager

Geographic organization

National sale manager Regional sale Zone sale Area market specialist District Sale

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2.Building a Company wide Marketing Orientation Requires

Commitment from top management Training programs; employee

empowerment Recognitions and rewards programs Modern marketing planning system Process-outcome focus

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3.Marketing Implementation Strategy address what and why of

marketing activities Implementation addresses the

who, where, when and how Top management’s strategic

decision to harvest a product must be translated into specific actions and assignment

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Successfully implementing programs requires four sets of skills: Diagnostic skills Identification of company level Implementation skills Evaluation skills

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4.EVALUATING AND CONTROLLING THE MARKETING PROCESS

Annual-plan control Profitability control Efficiency control Strategic control

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The heart of annual control Sets monthly or quarterly goals Monitors the company’s marketplace

performance Determines the causes of serious

performance deviations Takes corrective action to close the

gaps between goals and performance

Prof.YU Hongyan JLU

Evaluating and controlling the marketing process

Types of Control

Annual plan Profitability Efficiency Strategic

Responsibility of top and middle management

Examines whether planned results are achieved

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Evaluating Annual Performance

Market share analysis

Marketing expense-to-sales analysis

Financial analysis

Market-based scorecard analysis

Sales analysis

Performance Performance Analysis Analysis

ToolsTools

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Sales Analysis Measure and evaluate actual sales in r

elation to goals Sales-variance analysis Microsales analysis

The point is want factors contributed to a failure to meet sales goals

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Market-share Analysis Why need market share analysis Need track its market share

Total market share(total market) Served market share(willing to buy the

product) Relative market share(the largest competitor)

Customer penetration, customer loyalty, customer selectivity, and price selectivity

Prof.YU Hongyan JLU

Marketing expense-to-sales Analysis Sure the company is not

overspending to achieve sales goals

Minor fluctuations Major fluctuations

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Financial AnalysisAssets: cash, accounts receivable, inventory, and plan and equipment

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Market-based Scorecard Analysis Customer-performance scorecard

New customer, dissatisfied customer, lost customers target market awareness, target market preference, relative product quality and relative service quality

Stakeholder performance scorecard Employees, suppliers, banks,

distributors, retailers and stokeholds

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Managing The Marketing Process

Types of Control


Responsibility of marketing controller

Examines where the company is making and losing money

Functional expense for each activity

Functional expense for each channel

Profit and loss statement

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Types of Control


Responsibility of line & staff and / or marketing controller

Evaluates and attempts to improve spending efficiency of marketing expenditures

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Types of Control


Responsibility of top management and marketing auditor

Examines whether company is pursuing its best opportunities

Prof.YU Hongyan JLU


Strategic controls should be conducted periodically via: Marketing-effectiveness reviews Marketing audits

Additional reviews to consider: Marketing excellence review Ethical and social responsibility

review

Prof.YU Hongyan JLU

Review 1. CORPORATE AND DIVISION STRATEGIC

PLANNING1. Mission2. SBU3. SBU resource 4. Growth and downsize

2. BUSINESS STRATEGY PLANNING Mission, SWOT, Goal, strategy, program, implementation

and control

3. THE MARKETING PROCESS Value delivery sequence Marketing process Product planning

Documents

Prof.YU Hongyan JLU PowerPoint by Yu Hongyan Business School of Jilin University Chapter 4 Winning Markets Through Strategic Planning, Implementation,