Download Company and Marketing Strategy

Company and Marketing
Strategy
Preview Case:
Disney – What are its challenges?


Originally known for
films, animation,
theme parks.
Satisfying the
customer is
everyone’s job.


Mission: “make people
happy” & “make a
dream come true!”
Disney has grown via
diversification.

Discussion
Questions
1.
Has Disney grown
too large?
Will consumers
accept new Disney
businesses?
2.
Strategic Marketing Planning

Companies should look ahead and develop
long-term strategies to meet changing
conditions in their industries and ensure longterm survival

The task of selecting an overall company
strategy for long-run survival and growth 
“strategic planning”
Marketing’s key role in strategic planning

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.
What is Strategic Planning?

Strategic Planning defined:
 The
process of developing and maintaining a
strategic fit between the organization’s
resources, goals and capabilities and its
changing market opportunities.
Strategic Planning

It sets the the stage for the rest of the planning
in the firm
The aim  to shape and reshape company’s
businesses and products in order to reach to
targeted profits and growth.
Top-management job!

Part of a broader process: strategic management


Strategic Planning

Organizational levels subject to strategic
planning:
Corporate level
 Division level
 Business unit level
 Product level

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
Steps in Strategic Planning
Corporate Level
Defining the
Company
Mission
Setting
Company
Objectives
and Goals
Designing
the Business
Portfolio
Business unit,
product,
and market
level
Planning
marketing
and other
functional
strategies
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
organization’s purpose
--- what it wants to
accomplish in the larger
environment
 Acts as “invisible hand”
that guides employees to
work toward realizing the
organization’s goals.
Company Mission

Each company’s mission is shaped by five
elements:
 History
 Current
preferences of the owners and
management
 The market environment
 Resources
 Distinctive competences
Company Mission (cont.)

“Market-oriented definitions” of a business 
better than product or technological definitions
(see page 38)
market-oriented mission statement defines the
business in terms of satisfying basic customer needs
A


Mission statement must avoid being too narrow or
too broad
Mission statement to be guided by a “vision” - an
almost “impossible dream” that provides a direction
for the company for the next 10 to 20 years
Company Mission
(cont.)
Market Oriented
Characteristics of a
Good Mission
Statement:
Realistic
Specific
Fit Market Environment
Distinctive Competencies
Motivating
Company Goals and Objectives




Company’s mission needs to be turned into
detailed, supporting objectives for each level
of management
Mission hierarchy of objectives
As specific as possible
Marketing strategies must be developed to
support these marketing objectives
Hierarchy of Objectives
Mission
Statement
Marketing
Objective # 1
Marketing
Strategy
Marketing
Objective # 2
Marketing
Strategy
Marketing
Objective # 3
The Business Portfolio


Business portfolio collection of businesses
and products that make up the company
Business portfolio planning involves 2 main
steps:
1.
2.
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
Analyzing the Current Business Portfolio

Portfolio Analysis to identify and evaluate
the various businesses that make up the
company
identify key businesses Strategic Business
Units - SBU
 To

 To
SBU: unit of the company (separate mission and
objectives / can be planned independently from other
company businesses)
assess the attractiveness of its various SBUs
and decide how much support each deserves
Market Growth Rate
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
Boston Consulting Group’s
Growth-Share Matrix
Question Marks
High
• High growth & share
• Profit potential
• May need heavy
investment to grow
Cash Cows
Low
Market Growth Rate
Stars
?
• High growth, low share
• Build into Stars or phase out
• Require cash to hold
market share
Dogs
• Low growth, high share • Low growth & share
• Established, successful • Low profit potential
SBU’s
•Produce cash
Relative Market Share
High
Low
Analyzing the Current Business Portfolio

After the classification of its SBUs 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 shortterm cash flow
 Good for weak
cash cows,
question marks
and dogs
 Divest
 Sell or liquidate
 Good for dogs and
question marks
Problems With Matrix Approaches
Can be Difficult, Time-Consuming, & Costly to Implement
Difficult to Define SBU’s & Measure Market Share/ Growth
Focus on Current Businesses; provide little advice for future planning
Can Lead to Unwise Expansion or Diversification
Growth Strategies Ansoff’s Product / Market Expansion Grid
Existing
products
New
products
3. Product
development
Existing
markets
1. Market
penetration
New
markets
2. Market
development 4. Diversification
Growth Strategies

Existing
products
New
products
Making more sales
to current customers
without changing its
products.
Existing
markets
Market
penetration
Product
development

New
markets
Market
development
Diversification

Add new stores in
current market areas,
improve advertising,
prices, service or
store design.
Growth Strategies

Existing
products
New
products
Existing
markets
Market
penetration
Product
development
New
markets
Market
development
Diversification
Develop new
markets for current
products

Identify new
demographic or
geographic markets

Domestic or
international
Growth Strategies

Existing
products
New
products
Existing
markets
Market
penetration
Product
development
New
markets
Market
development
Diversification
Offering modified
or new products to
current markets.

New styles, flavors,
colors, or modified
products
Growth Strategies
Existing
products
New
products
Existing
markets
Market
penetration
Product
development
New
markets
Market
development
Diversification

New products for
new markets.

Start up or buy
new businesses
Downsizing

Some reasons that a company might want to
abandon products or markets:

The market environment might change (making some
of the company’s 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 company’s products or business units
age and die.
Functional Planning




The company’s overall strategic plan 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 must
work together to accomplish strategic objectives
Marketing plays a key role
Marketing’s Key Role in
Strategic Planning





Provide a guiding philosophy
Identify attractive opportunities
Design effective strategies
Build strong value chains
Form superior value delivery networks
Marketing’s 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
Marketing’s Key Role:
Partner Relationship Management

Each department in the company as a link in the
company’s value chain;

Each dept.carries out value-creating activities
 The company’s overall success 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
Marketing’s Key Role:
Partner Relationship Management

The company needs to look beyond its own value
chain in order to create customer value:
network network made up of the
company, suppliers, distributors, and customers who
partner with each other to improve the performance of
the entire sytem
 Value-delivery

Competition today takes place between the entire value
delivery networks!
Business Unit Strategic Planning
External Analysis
(Opport.&Threat)
Mission
SWOT
Setting
Selecting
Developing
Implemen-
Feedback &
Statement
ANALYSIS
Objectives
Strategy
Program.
tation
Control
Internal Analysis
(Streng.&Weakness)
Business Unit Strategic Planning
Mission each SBU needs to define its
specific mission within the broader company
mission
 External Environment Analysis to build a MIS
to monitor:
 Business
Key external macroenvironment forces
 Significant microenvironment actors
 Trends and important developments to identify the
associated opportunities and threats

Business Unit Strategic Planning
Environment Analysis Each business
needs to evaluate its internal strengths and
weaknesses periodically
 Internal

“Checklist
for Performing Strengths/Weaknesses
Analysis”
 Management or an outside consultant reviews the
business’s marketing, financial, manufacturing and
organizational competencies and rates each factor
as strength or weakness
SWOT
ANALYSIS
Business Unit Strategic Planning /
ı
Example of a Checklist
PERFORMANCE
Main
Strength
MARKETING
Firm's reputation
Market share
Product/service quality
Pricing
Distribution
Promotion
Sales force
R&D / Innovation
Geographical location
FINANCE
High profitability
Low cost of capital
Cash flow
Financial stability
PRODUCTION
Scale economies
Capacity of meeting demand
Talented productive power
Timely production
Technical competence
ORGANIZATION
Skillful managers
Loyal employees
Entrepreneurship orientation
Flexibility degree
Rapid adaptation
2nd
Strength
Moderate
2nd
Main
Weakness Weakness
IMPORTANCE
High
Medium
Low
Business Unit Strategic Planning

Goal Formulation (Goals objectives that are
specific with respect to magnitude and time)
Turning objectives into measurable goals 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
Business Unit Strategic Planning

Strategy Formulation
A game plan for how to reach goals (while
goals indicating what a business unit wants to achieve)
 3 general type of strategy:
 Strategy
Leadership to achieve the lowest production
and distribution costs / to price lower than its
competitors and win a large market share
 Differentiation to concentrate on achieving
performance in an important customer benefit area
valued by a large part of the market
 Focus on one or more narrow market segments
rather than going after a large market
 Cost
The Marketing Process

Planning at the corporate, division and business
levels integral part of the marketing process

Marketing Process (definition) 
consists of analyzing mktg opportunities,
selecting target markets, developing the mktg
mix, and managing the mktg effort
The Marketing Process
DemographicEconomic
Environment
TechnologicalNatural
Environment
Marketing
Intermediaries
Product
Suppliers
Place
Profitable
Customer
Relshps.
Price
Publics
Promotion
PoliticalLegal
Environment
Competitors
SocialCultural
Environment
The Marketing Process (cont.)
1.
2.
3.
4.
5.
Analyzing marketing opportunities
Researching and selecting target markets
Designing marketing strategies
Planning marketing programs
Organizing, implementing, controlling the
marketing effort
The Marketing Process (cont.)
1.
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
The Marketing Process (cont.)
2.
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
Strategy
1. Market
Segmentation
2. Target marketing
3. Market
Positioning
 Customers grouped
 Geographic
 Demographic
 Psychographic
 Behavioral
 Market
by:
segment is a
groups of consumers
who respond in similar
ways to marketing
efforts.
Strategy
1. Market
Segmentation
2. Target marketing
3. Market
Positioning
 Evaluation
of each
segment’s
attractiveness
 Selection of segments
with greatest long-term
profitability
 A company can choose
one or several
segments to target
Strategy
1. Market
Segmentation
2. Target marketing
3. Market
Positioning
 The
place the product
occupies in the
consumer’s mind
 Products are positioned
relative to competing
products
 Marketers look for
clear, distinctive and
desirable place in
positioning
The Marketing Process (cont.)
3.
Designing marketing strategies for
competitive advantage




Market leader strategies
Market challenger strategies
Market follower strategies
Market nicher strategies
The Marketing Process (cont.)
4.
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 4P’s
The 4P’s include:




Product
Place
Promotion
Price
The Marketing Process (cont.)
5.
Managing the marketing effort




Marketing Analysis
Marketing Planning
Marketing Implementation
Marketing Control
Managing the Marketing Effort
Marketing Functions

•
•
•
•
Analysis
Planning
Implementation
Control
Finding opportunities : the
company must analyze






its market & mktg
environment
company strengths &
weaknesses
current and possible mktg
actions
Avoiding threats
Understanding strengths
Analyzing weaknesses
Managing the Marketing Effort
Marketing Functions
•
•
•
•
Analysis
Planning
Implementation
Control
 Marketing plans include:
 Executive summary
 Analysis of current situation
 Objectives
 Targets and positioning
 Marketing mix
 Budget
 Controls
Marketing Planning



Through strategic planning the company
decides what it wants to do with each business
unit
Marketing planning involves deciding on
marketing strategies that will help the company
reach its strategic objectives
Marketing plan 2 levels:


Strategic mktg plan develops the broad mktg objectives and
strategy based on an analysis of the current market situation and
opportunities
Tactical mktg plan outlines specific mktg tactics, including
advertising, merchandising, pricing, channels, service, etc.
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
Managing the Marketing Effort
Marketing Functions
•
•
•
•
Analysis
Planning
Implementation
Control

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

Managing the Marketing Effort
Marketing Functions
•
•
•
•
Analysis
Planning
Implementation
Control

Evaluation of the
results of marketing
strategies

Checks for
differences between
goals and
performance
Measuring Effectiveness

Return on marketing (marketing ROI)
 The
net return from a marketing investment
divided by the costs of the investments
Marketing Implementation
Marketing Analysis of Company’s Situation
Marketing
Planning
Marketing
Implementation
Develop Strategic
Plans
Carry Out
The
Plans
Develop
Marketing
Plans
Control
Measure
Results
Evaluate
Results
Take
Corrective
Action