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Developing Marketing
Strategies and Plans
2
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Figure 2.2 The Strategic Planning,
Implementation,
and Control Processes
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Strategic Planning
Strategic Planning is the process of developing and
maintaining a Strategic fit between the organizations
goals and capabilities and its changing marketing
opportunities. Strategic Planning involves-1. Defining the corporate mission
2. Setting objectives
3. Designing business portfolio
4. Coordinating functional efforts
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Corporate Headquarters
Planning Activities
Define the corporate mission
Establish strategic business units
(SBUs) Assign resources to each SBU
Assess growth opportunities
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1. Defining the corporate Mission
Missionis a statement of the organizationspurpose- what
it wants to accomplish in the larger environment.
It seeks to provide a sense of purpose, direction and
opportunityTo define the mission, the company should address the
following questions:
What is our business?
Who is the customer? What is of value to the customer?
What will our business be?
What should our business be?
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Characteristics of Good Mission
Statements
Focus on limited number of goals
Stress major policies and values
Define major competitive spheres
Take a long-term view
Short, memorable, meaningful
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Table 2.3Product vs. Market Oriented Mission
Company Product Market
Missouri-Pacific
Railroad
We run a railroad We are a people-
and-goods mover
Xerox We make copying
equipment
We improve office
productivity
Standard Oil We sell gasoline We supply energy
Columbia Pictures We make movies We entertain
people
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2. Establishing Strategic Business
Units
Strategic Business Unit is a unit of the company that has
a separate mission and that can be planned independently
from the rest of the company. It can be a company
division, a product line within the division, and sometimes
a single product or brand.
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Characteristics of SBUs
It is a single business or collection of
related businesses
It has its own set of competitors
It has a manager responsible for
strategic planning and profitability
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3. Assigning Resources to Each
SBU
The purpose of identifying the company's strategic
business units is to develop separate strategies and assign
appropriate funding.
Two of the best-known business portfolio evaluation
approaches are -
1. Boston Consulting Group (BCG) Approach
2. The General Electric (GE)Approach
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Boston Consulting Group (BCG) Approach
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The growth-share matrix is divided into four cells
based on market growth rate and relative market
share.
Figure:BCG Growth-Share Matrix
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Boston Consulting Group (BCG)
Approach
Stars are high-share businesses or
products.
Cash cows are low-growth, high-share
businesses or products.
Question marks are low-share business
units in high-growth market.
Dogs are low-growth, low-share businesses
or products
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SBU Strategies
1.Build/Invest- Question Marks
2. Hold/Maintain- Stars and strong Cash
cows
3. Harvest- Weak Cash Cows
4. Divest- Dogs
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The General Electric Business Screen was originally
developed to help marketing managers overcome the
problems that are commonly associated with the Boston
Matrix (BCG).
The GE approach introduces a three by three matrix. It
utilizes industry attractiveness as a more inclusive
measure than BCG's market growth and substitutes
competi tive positionfor the original's market share.
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General Electric (GE) Approach
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General Electric (GE) Approach
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Market attract iveness depend s
on:
Size of market.
Market rate of growth.
The nature of competition and
its diversity.
Profit margin.
Impact of technology, the law,
and energy efficiency.Environmental impact.
Comp et it ive pos i t ion depends
on:
Market share.
Management profile.R & D.
Quality of products and services.
Branding and promotions
success.
Place (or distribution).
Efficiency.
Cost reduction.
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General Electric (GE) Approach
The GE matrix is divided into nine cells, which in turn fall into three
zones-
upper left corner
lower left to upper right corner
lower right corner
The three cells in the upper left corner indicate strong SBUs in
which the company should invest or grow. The diagonal cells
stretching from the lower left to upper right indicate SBUs that are
medium in overall attractiveness. The company should pursueselectivity & manage for earnings in these SBUs. The three cells in
the lower right corner indicate SBUs that are low in overall
attractiveness. The company should give serious thought to
harvesting or divesting these SBUs.
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3. Planning New Businesses
The company plans for its existing businesses allow it to project total
sales & profits. If there is agap between future desired sales and
projected salescorporate management will have to develop or acquire
new business to fill it.
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Strategic Planning Gap:
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3. Planning New Businesses
Three options are available to fill up the strategic planning
gap:
The first is to identify opportunities to achieve further
growth within current businesses (Intensive growth
opportunities)
The second is to identify opportunities to build or acquire
businesses that are related to current businesses
(Integrative growth opportunities)
The third is to identify opportunities to add attractive
businesses tat are unrelated to current businesses
(Diversification growth opportunities)
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Intensive Growth Strategies
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Three Intensive Growth Strategies:
Ansoffs Product/Market Expansion Grid
Three Intensive Growth Strategies:
Ansoffs Product/Market Expansion Grid
4. Diversification2. Marketdevelopment
Newmarkets
1. Marketpenetration
Existingmarkets
Existing
products
3. Productdevelopment
New
products
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Integrative Growth strategies
1. Backward integration (integration with
the suppliers)
2. Forward integration (integration with
the distributors)3. Horizontal integration (integration with
one or more of the competitors)
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Diversification Growth
Strategies
Diversification growth makes sense when good
opportunities can be found outside the present
businesses. Three types of diversification are
possible:
1. Concentric diversification strategy ( new
products, new market, technology or marketing may
be related)
2. Horizontal diversification strategy (new products,
new/current market, technology unrelated)
3. Conglomerate diversification strategy (new
products, new market, new technology)
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Figure 2.5 The Business Unit
Strategic Planning Process
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SWOT Analysis
Strengths
Weaknesses
Opportunities
Threats
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Porters Generic Strategies
Overall Cost Leadership
Differentiation
Focus
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Marketing Plan Contents
Executive summary
Table of contents
Situation analysisMarketing strategy
Financial projections
Implementation controls