The big cultural trend???

Formal Planning

Many companies operate without formal plans, yet plans and planning can provide many benefits such as:

  • Encouraging management to think ahead systematically.
  • Forcing managers to clarify objectives and policies.
  • Better coordination of company efforts.
  • Develop clearer performance standards for control.
  • Helping the company to anticipate and respond quickly to environmental changes and sudden developments.
  • A carefully developed budget is the simplest form of company planning.

    • Strategic Planning

    Strategic Planning is the Process of Developing and Maintaining a Strategic Fit Between the Organization’s Goals and Capabilities and Its Changing Marketing Opportunities. This represents the core activity of Marketing -- That of Matching.
    One of the Goals of the Strategic Planning Process is to identify competitive advantages that the company can develop, maintain, and use to more profitably serve its stakeholders.
    When a competitive advantage is such that it also results in customers preferring the company's offering over those of competitors, it is known as a differential advantage.

    Russel Aackoff's Planning model

    The Five Phases of Planning

    1) Formulating the Mess

  • This is where the organization assesses the current situation looking for Strengths, Weaknesses, Opportunities, and Threats. In Aackof's view, this must precede a useful development of an organizational mission.
    Answers the question: "Where are we now?"

    • 2) Ends Planning

  • This is where the objectives of the organization and the sub organizations are formulated. It includes the formulation of a mission and vision for the larger organization and its sub-units.
    Answers the question:           "Where do we want to go?"

    • 3) Means Planning

  • This is where the policies, procedures, and technologies to use are determined.
    Answers the question:           "What means or methods will we use to get there?"

    • 4) Resource Planning

  • This is where the allocation of resources occurs. The decisions as to who will get what money/people/stuff at what time and in what quantities.
    Answers the question: "Where will the money, brains, and materials come from and how will it be distributed through the organization?"

    • 5) Implementation and Control

  • This is where the plans are put into action and the standards that were developed are used to make sure that the organization is on track.
    Answers the questions: "How are we doing? Are we doing things right? Are we still heading in the right direction? Are we doing the right thing?"

    • The Growth Assumptions

    • Growth is good
    • Growth in necessary
    • Not growing is very bad

    What’s wrong with this picture???



    Designing the Business Portfolio

    The business portfolio is the collection of businesses and products that make up the company.

    The company must:

  • analyze its current business portfolio or Strategic Business Units (SBU’s)

  • decide which SBU’s should receive more, less, or no investment

  • develop growth strategies for adding new products or businesses to the portfolio

    • Market -- Business – Industry

         a market is a group of actual or potential buyers;

         an industry is a set of all businesses that compete with each other by selling things that meet similar needs;

         a business is an organization that sells something for profit.

    Analyzing Current SBU’s:
    GE’s Strategic Business-Planning Grid

    AKA the Stop-light Grid

    Each SBU is evaluated on an index consisting of a number of measures for each dimension.
    Industry Attractiveness
      Market Growth Rate,   Size of Market,   Level of Competition,   Barriers to Entry,   Seasonality Cyclicality of demand,   Economies of Scale,   etc.
    Attractive Industry
    Strong SBU    		  
      Moderate on
    both dimensions    		 
      Lousy Industry
    Weak SBU
      Business Strength
    Relative Market Share | Technology advantages e.g. patents
    Knowledge of customers | Reputation with publics
    Freedom from social issues e.g pollution, labor disputes, ethics of the product etc. | etc.
    Each SBU is evaluated on an index consisting of a number of measures for each dimension.

    Boston Consulting Group Approach

    Industry Attractiveness
    Measured by the single variable Market Growth Rate
    A STAR
    Attractive Industry
    Strong SBU
    		A Question Mark  
    A Cash Cow  
    A Dog
    Lousy Industry
    Weak SBU
      Business Strength
    Measured by the single variable: Relative Market Share

    Problems With Matrix Approaches

     

    Growth Strategies

    Intensive Growth
    Summary Same Product New or changed Product
    Same Customers
    or Market    		 Market
    Penetration    		 Product
    Development
    New Customers
    or Market    		 Market
    Development    		 Diversification

    Market Penetration: making more sales to current customers without changing its products.

      Same Product New or changed Product
    Same Customers
    or Market    		 Market
    Penetration    		 Product
    Development
    New Customers
    or Market    		 Market
    Development    		 Diversification

    How? Add new stores in current market areas, improve advertising, prices, service or store design. Develop new uses or use occasions for your product.

    Product Development: offering modified or new products to current markets.

      Same Product New or changed Product
    Same Customers
    or Market    		 Market
    Penetration    		 Product
    Development
    New Customers
    or Market    		 Market
    Development    		 Diversification

    How? New styles, flavors, colors, or modified products.

    Market Development: develop new markets (served customers) for current products.

      Same Product New or changed Product
    Same Customers
    or Market    		 Market
    Penetration    		 Product
    Development
    New Customers
    or Market    		 Market
    Development    		 Diversification

    How? Identify new demographic or geographic markets.

    Diversification:: expand into unknown territory, serving new customers with new (for you) products.

      Same Product New or changed Product
    Same Customers
    or Market    		 Market
    Penetration    		 Product
    Development
    New Customers
    or Market    		 Market
    Development    		 Diversification

    How? Identify profit opportunities and acquire or build new businesses. Risky. Company reputation may aid the new business.

    Integrative Growth

    Integrate present suppliers, customers or competitors into the organization

    Forward and Backward Integration known as vertical integration on the value chain!

    Forward → towards the → customer.

    Backward ← towards the ← supplier

    Horizontal integration is when you expand by merging with or buying competitors.

    The ValueChain          
    Forward
    		 
    →
    		    (front you and me!)
    Vertical
    Integration    		          
    →
    		selling
     automobiles
               
    →
    		  distributing
     automobiles    		  
    ↑
             
    →
    		 making
    automobiles          		  
    ↑
    		 
           
    →
    		  fabricating
    metal parts         		 
    ↑
    		   
         
    →
    		  smelting/
    refining
    facilities         		 
    ↑
    		      
       
    →
    		  ore
    transport         		 
    ↑
    		       
     
    →
    		  mines  
    ↑
    		         
    mining
    equipment
    (back)         		 
    ↑
    ←
     
    Backward
         		        







    The Marketing Process
    focus on the customer!

    Connecting With Customers

  • Market Segmentation : determining what distinct groups of buyers (segments) with different needs, characteristics, or behavior exist.

    • They should be similar in what influences their purchase behavior.

    Connecting With Customers

  •    Choose Target Market segments : evaluate each segment’s attractiveness and selecting one or more segments to serve.

    • They should be accessible, and large enough to justify specially tailored marketing efforts.

    Connecting With Customers

  • Position your offering Against the competition
    Choose the segment to serve and the marketing mix For the customer

    • Choose the message to communicate

    Developing the Marketing Mix

    The 4 P’s & 4C’s of the Marketing Mix

    4 P’s
    Product
    Price
    Place
    Promotion
    4 C’s
    Customer Solution
    Customer Cost
    Convenience
    Communication

    Taken together, these create customer value

    Most recent revision:   Check back for updates.