GRAHAM HOOLEY • NIGEL F. PIERCY • BRIGETTE NICOULAUD

2Strategic marketing planning

Strategy is the matching of the activities of an organisation to the environment in which it operates and to its own resource capabilities

Johnson and scholes (1988)

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Introduction

• Company’s capabilities are matched to the market environment in which it operates not for today but in foreseeable future

• Strategic planning attempts to answer three basic questions– What is the business doing now?– What is happening in the environment?– What should the business be doing?

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Figure 2.1 Strategic fit

Organizational resources needed for implementation of

the strategy

Market needs & conditions

Strategy adapted to the needs and

requirements of the market

Organizational resources suited to

the markets in which it operates

Marketing strategy

Organizational resources

Defining the business purpose or mission

• Requires asking fundamental questions:– What business are we in?– What businesses do we want to be in?– Who is our major competitor?– What markets are we in?

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Mission formulation and statement

• The strategic intent strategic intent or vision of where organization want to be in foreseeable future

• The values of the organization values of the organization should be spelled out to guide operations

• Articulate distinctive competenciesdistinctive competencies• Market definitionMarket definition, in terms of customer targets• Finally, it should spell out where organization

intends to be positionedpositioned in marketplace

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Figure 2.2 Components of mission

Market definitionCustomer targets

Strategic intentVision of what you want to be

Company valuesGuiding principles

Competitive positioningDifferential advantage

Distinctive competencies

Core skills

MissionObjectives and strategy

The marketing strategy process

• Three main levels:– Establishment of a core strategy

• Assessment of companies capabilities (strengths and weaknesses relative to competition – opportunities and threats posed by the environment)

– The creation of the company’s competitive positioning

• competitive edge in serving customers better than competition is defines

– The implementation of the strategy• Department putting strategy into action is created

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Figure 2.3 The marketing strategy process

Business purpose

Core strategy

Competitive positioning

Marketing mix

Implementation

Environment analysis

Market target

Control

Company analysis

Competitive advantage

Organization

ESTABLISHING THE CORE STRATEGY

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Analysis of organizational resources

• Creation of long list of resources and many weaknesses that an organization has at its disposal

• They may stem from;– Skills of the workforce in assembling products– Skills of management in planning– R&D department in new product ideas– Distinctive competencies may lie in image, market

presence or its after sales services (exploitable)6-11

DRUKER’S SEVEN TYPES OF BUSINESSES

Product portfolio

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Druker’s seven types of businesses

• Today’s breadwinners– products earning healthy profits now

• Tomorrow’s breadwinners– Expected to take breadwinning role in the future

• Yesterday’s breadwinners– Supported the company in the past

• Developments– Recently developed that may have some future

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Druker’s seven types of businesses

• Sleepers– Have been around for sometime but failed to

establish themselves in their markets

• Investments in managerial ego– Have strong product champions among influential

managers

• Failures– Failed to play a significant role in the company’s

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Figure 2.4 Product types in the portfolio

Tomorrow's breadwinners

DevelopmentsSleepersEgo trips

FailuresYesterday’s

breadwinners

Today’s breadwinners

LifeCycle

DeathCycle

High

Low

LowHighBusiness strength

Portfolio planning

• Diversified organizations need to find methods for assessing the balance of business in its portfolio– Development of business strategies and allocation

of resources (both managerial and financial)– Analyzing portfolio balance

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Figure 2.5 Balancing the business portfolio

Products that generates cash

NOW

Other that use cash now but

promise to generate cash in

the FUTURE

Long-run corporate health requires a balance of:

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Figure 2.6 Unbalanced, present-focused business portfolio

Products that generates cash

NOW

Other that use cash now but

promise to generate cash in

the FUTURE

A great present but what about

the future?

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Figure 2.7 Unbalanced, future-focused business portfolio

Products that generates cash

NOW

Other that use cash now but

promise to generate cash in

the FUTURE

Future prospects good but who pays today’s bills?

Analysis of the markets served

• Opportunities and threats facing the company• Stem from two main areas;

– The customers (both current and potential) and competitors ( again both current and potential)

• Most markets consist of heterogeneous customers (varying needs and demands)

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Figure 2.8 SWOT Analysis

Strengths

What are we god at relative to competitors?

Threats

What emerging dangers must we avoid or counter?

Opportunities

What changes are creating new options for us?

Weaknesses

What are we bad at relative to competitors?

Internal External

Good points

Danger points

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Figure 2.9 SWOT strategic implications

Exploit existing strengths in areas of opportunity

Build new strengths to counter threats

Use existing strengths to counter threats

Build new strengths first to take advantage of

opportunities

Opportunities Threats

Strengths

weaknesses

Core strategy

• Define the key factors of success• Company sets its marketing objectives• Objectives should be both long and short term• Core strategy varies at different stages of

product life cycle• Expand the market (achieved in early growth

stages of lifecycle) or to increase share of existing market (pursued during late growth/maturity stages

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Expand the market

• Market expansion can be achieved through attraction of new users to the product or service

• Through geographic expansion of the company’s operations (both domestically and internationally)

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Figure 2.10 Strategic focus

Improve performance

Increase sales Improve productivity

Expand market Increase share. Expand market Increase share.

New uses

New users

Increasing use frequently

New products

Win share

Acquire share

Create alliances

Increase price

Add value

Change product mix

Capital costs

Fixed costs

Variable costs

Increase share

• Main routes to increasing share include;– Winning competitors, customers– Merging with (or acquiring) the competitors– Entering into strategic alliances with competitors,

suppliers and/or distributors

• Increasing usage rate may be viable approach to expanding the market for some products

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Improving profitability

• Through improving margins• Increasing price, reducing cost or both• Removing poorly performing products and

concentrating on more financially viable

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Creating the competitive positioning

• Statement of company’s market targets– Where the company will compete and differential

advantage– How the company will compete

• Market targets– Select those targets most suited to utilizing

company’s strengths and minimizing vulnerability due to weaknesses

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Market targets

• Market will generally be more attractive if the following hold;– It is large– It is growing– Contribution margins are high– Competitive intensity and rivalry are low– There are high entry and low exit barriers– The market is not vulnerable to uncontrollable

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DIFFERENTIAL ADVANTAGE

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Cost leadership

• Company seek to obtain a cost structure significantly below than that of competitor– Through construction of efficient scale economies,

cost minimization in R&D, service, sales force, advertising etc

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Figure 2.11 Routes to competitive advantage

Competitivedisadvantage

High

Low

LowHighRelative delivered cost

Competitiveadvantage

Stuck in the middle

Differentiation

• Something that is seen as a unique in the market

• Company’s strengths and skills are used to differentiate the company’s offerings than competitors

• Differentiation can be achieved through design, style, product or service features, price, image etc

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Differentiation and cost leadership

• Both could be pursued simultaneously (Fulmer and Goodwin, 1988)

• Cost leadership may be impossible to sustain due to competitor imitation

• Cost leadership requires minimal spending on R&D, product improvement and image creation

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Implementation

• Task of marketing management is to implement those decisions through marketing effort

• Three basic elements of implementation;– Marketing mix, organization and control

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Marketing mix

• Each of the element of the mix should be designed to add up to the positioning required

• Where elements of the mix do not pull in the same direction but contradict each other, the positioning achieved will be confused and confusing to customers

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Organization

• How the marketing effort and the marketing department are organized will have effect on how well the strategy can be can be carried through

• Required manpower and financial resources to be made available

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Control

• Monitor and control the effort• Performance can be monitored in two ways;

– Market performance (sales, market share, customer attitude and loyalty and changes in them over time)

– Financial performance ( monitoring of product contribution relative to the resources employed to achieve it)

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AMBER REPORTS THE MOST IMPORTANT MARKETING METRICS USED BY COMPANIES

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Marketing metrics

• Relative perceived quality• Loyalty/retention• Total no of customers• Customer satisfaction• Relative price (market share/volume)• Perceived quality/esteem• Complaints (level of dissatisfaction)• Awareness and distribution/availability

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