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Winning Markets ThroughWinning Markets ThroughMarket-Oriented Strategic PlanningMarket-Oriented Strategic Planningbyby

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Kotler on Marketing

It is more important to do what is strategically right than what is immediately profitable.

The Value Chain

• Micheal Porter of Harvard has proposed the value chain as the tool for identifying ways to create more customer value.

• The value chain identifies nine strategically relevant activities that create value and cost in a specific business.

Mar

gin

Margin

The Generic Value Chain

Primary Activities

Su

pp

ort

Act

ivit

ies

Procurement

Serv-ice

Technology Development

Human resource management

Firm infrastructure

InboundLogistics

Opera-tions

Out-bound

Logistics

Market-ingand

sales

The Value Chain

• BENEFITS– Helps in examining costs and performance in each

value creating activity.

– Helps in benchmarking those activities

– Helps in coordinating the activities

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Strategic Planning• Successful marketing requires companies to

have capabilities such as understanding ,creating, delivering, capturing and sustaining customer value.

• But still only a handful of companies stand out as master marketers.

• These successful companies focus on the customer and are organized to respond effectively to changing customer needs.

Strategic Planning

• Strategic Planning calls for action in three areas– Managing business as an investment portfolio

– Assessing each business’s strength by considering the market growth rate and the company’s position and fit in that market.

– Establishing a strategy (a game plan)

Strategic Planning

• Strategic Planning is carried out at four organizational levels.

– Corporate and Division Strategic Planning

– Business Unit Strategic Planning

– Product Level Strategic Planning

Organization ChartUnilever

HPC FOODS

Home Care Personal Care UPL U Foods Ltd U Foods Solutions

Surf Excel

Comfort

Clear

Close Up

Fair and Lovely

Life Buoy

Blue Band

Flora

Supreme

Lipton

Energile

Rafan

Knorr

Lux Walls

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Corporate and Division Strategic Planning

• All corporate headquarters undertake four planning activities– Defining the Corporate Mission– Establishing Strategic Business Units (SBUs)– Assigning resources to each SBU– Assessing Growth Opportunities

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• Defining the Corporate Mission– Mission statements define which competitive

scopes the company will operate in• Industry scope• Products and applications scope• Competence scope• Market-segment scope• Vertical scope• Geographical scope

Corporate and Division Strategic Planning

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Can you name a company that has Can you name a company that has recently changed its product scope or recently changed its product scope or market segment scope in a very public market segment scope in a very public way? Was this an expansion or way? Was this an expansion or contraction of scope?contraction of scope?

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• Establishing Strategic Business Units (SBUs)– Three characteristics of SBUs

• Single business or collection of related businesses that can be planned for separately

• Has its own set of competitors• Has a manager who is responsible for strategic

planning and profit

Corporate and Division Strategic Planning

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• Assigning Resources to each SBU– The purpose of identifying the company’s strategic

business units is to develop separate strategies and assign appropriate funding.

– Senior management knows that its portfolio of businesses usually includes a number of “yesterday’s has-beens” as well as “tomorrow’s breadwinners”.

Corporate and Division Strategic Planning

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• Assessing Growth Opportunities– Intensive Growth– Integrative Growth– Diversification Growth (concentric, horizontal,

conglomerate)– Downsizing Older Businesses (prune, harvest,

divest)

Corporate and Division Strategic Planning

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Give an example of a market segment Give an example of a market segment where integrative growth would be where integrative growth would be preferable to growth through preferable to growth through diversification. Explain diversification. Explain why one approach is better why one approach is better than the other.than the other.

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Business Unit Strategic Planning

• Business Mission• SWOT Analysis

– External Environment Analysis (Opportunity and Threat Analysis)

– Internal Environmental Analysis (Strength/Weakness Analysis)

• Goal Formation (SMART)– Specific, Measurable, Actionable, Realistic,

Time Bound

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Give some examples of companies Give some examples of companies that have grown to dominate their that have grown to dominate their market segment by using technology market segment by using technology to make buying opportunities more to make buying opportunities more convenient and efficient.convenient and efficient.

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• Porter’s Generic Strategies– Overall cost leadership– Differentiation– Focus

• Strategic Group

Business Unit Strategic Planning

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• Strategic Alliances / Marketing Alliances– Product or service alliances– Promotional alliances– Logistical alliances– Pricing collaborations

Business Unit Strategic Planning

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Business Unit Strategic Planning

• Program Formulation and Implementation– A great marketing strategy can be sabotaged by poor

implementation. – Must take care of all the stake holders.

• Feedback and Control – The marketplace will change, and when it does, the

company will need to review and revise its implementation programs, strategies, or even objectives.

• A market plan is a written document that summarizes what the marketer has learned about the market place and indicates how the firm plans to reach its marketing objectives.

Product Level Strategic Planning

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Product Level Strategic Planning

• Contents of the Marketing Plan– Executive Summary– Current Marketing Situation– Opportunity and issue analysis– Objectives– Marketing strategy– Action programs– Financial projections– Implementation controls