Chapter 4

Winning Markets Through

Market-Oriented Strategic
Planning
by

PowerPoint by
Milton M. Pressley
University of New Orleans
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Kotler on
Marketing
It is more important
to do what is
strategically right
than what is
immediately
profitable.

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 Chapter Objectives
 In this chapter, we examine the
following questions:
 How is strategic planning carried out at
the corporate and division levels?
 How is planning carried out at the
business unit level?
 What are the major steps in the
marketing process?
 How is planning carried out at the
product level?
 What does a marketing plan include?
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Strategic Planning: Three Key Areas
and Four Organization Levels
 Three Key Area:
 Managing a company as an investment portfolio
 Assessing business strength by considering the
market growth’s and company position
 Establish a strategy
 Four Organization level
 Corporate level
 Divisional level
 Business unit level
 Product level
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 Strategic Marketing Planning

Planning Implementing Controlling

Corporate Planning Organizing Measuring Result

Division Planning Implementing

Diagnosing result

Business Planning

Taking Corrective
Product Planning Action

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 Marketing Plan Operate
 Strategic marketing plan
 Lay out target market and value proposition
will be offered
 Analysis the best market opportunities
 Tactical marketing plan
 Specific marketing tactic include: product
feature, promotion, merchandising, pricing,
sales channel and service.

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 Marketing Plan Operate

MARKETING PLAN IS THE CENTRAL

INSTRUMENT FOR DIRECTING AND
COORDINATING THE MARKETING
EFFORT

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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
 Planning new businesses, downsizing, or
terminating older businesses

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 Corporate and Division
Strategic Planning
 Defining the Corporate Mission
 Focus on limited number of goals
 Stress major policies and values
 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
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Can you name a company that has
recently changed its product scope
or market segment scope in a very
public way? Was this an expansion
or contraction of scope?

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 Corporate and Division
Strategic Planning
 Establishing Strategic Business Units
(SBU’s)
 SBU must be viewing as a customer satisfaction
process
 Have a specifics: target market definition,
strategic market definition
 Can be define three dimensions: customer
group, customer need, technology.

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 Table 4.1: Product-Oriented versus Market-Oriented
Definitions of a Business
Company Product Definition Market Definition
Missouri-Pacific We run a railroad We are a people-and-
Railroad goods mover
Xerox We make copying We help improve office
equipment productivity
Standard Oil We sell gasoline We supply energy

Columbia Pictures We make movies We market entertainment

Encyclopaedia We sell encyclopedias We distribute Information

Carrier We make air We provide climate

conditioners and control in the home
furnaces

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 Corporate and Division
Strategic Planning
 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

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 The Growth-Share Matrix (BCG Matrix)
 Relative market share
 Market growth rate
 Four Cells
 Question Marks
 Stars
 Cash Cows
 Dogs
 SBU Strategies
 Build
 Hold
 Harvest
 Divest
 SBU Lifecycle

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 MATRIX BCG
20 %
M
A 18 %
R 16 %
14 % Stars Question Mark
K
E 12 %
T 10 %
8%
G 6%
R Cash Cow Dogs
4%
O
2%
W 0
T

0.3 x
0.2 x
0.1 x
1.5 x

0.5 x
0.4 x
10 x

4x
2x

1x

H
MARKET SHARE
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Can you give an example of a “Star”
that skipped “Cash Cow”, and went
straight to “Dog” status?

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Corporate and Division Strategic Planning
 The General Electric Model
Business Strength
Strong Medium Weak
5.00
High
Market Attractiveness

3.67
Medium

2.33
Low

5.00 3.67 2.33 1.00 4-17

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 Corporate and Division Strategic Planning
 Market Attractiveness
 Annual market growth rate
 Overall market size
 Historical profit margin
 Current size of market
 Market structure
 Market rivalry
 Demand variability
 Global opportunities

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 Corporate and Division Strategic Planning
 Business Strength
 Current market share
 Brand image
 Brand equity
 Production capacity
 Corporate image
 Profit margins relative to competitors
 R & D performance
 Managerial personal
 Promotional effectiveness

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 Table 4-2: Factors underlying Market Attractiveness and Competitive
Position in GE Multifactor Portfolio Model: Hydraulic-Pumps Market
Rating =
Weight (1-5) Value
Overall market size 0.20 4 0.80
Annual market growth rate 0.15 5 0.75
Historical profit margin 0.15 4 0.60
Competitive intensity 0.15 2 0.30
Technological requirements 0.15 4 0.60
Market
Inflationary vulnerability 0.05 3 0.15
Attractiveness
Energy requirements 0.05 2 0.10
Environmental impact 0.05 5 0.25
Social-political-legal 0.05 4 0.20

1.0 3.75

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Table 4-2: Factors underlying Market Attractiveness and Competitive
Position in GE Multifactor Portfolio Model: Hydraulic-Pumps Market
Rating =
Weight (1-5) Value
Market Share 0.10 4 0.40
Share growth 0.15 2 0.30
Product quality 0.10 4 0.40
Brand reputation 0.10 5 0.50
Distribution network 0.05 4 0.20
Promotional effectiveness 0.05 3 0.15
Business Productive capacity 0.05 3 0.15
Strength Productive efficiency 0.05 2 0.10
Unit cost 0.15 3 0.45
Material supplies 0.05 5 0.25
R&D performance 0.10 3 0.30
Managerial personnel 0.05 4 0.20

1.0 3.40

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Corporate and Division Strategic Planning
 The General Electric Model
Business Strength
Strong Medium Weak
5.00
High
Market Attractiveness

3.67
Medium

2.33
Low

5.00 3.67 2.33 1.00 4-22

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 Corporate and Division Strategic Planning
 Strategies
 Protect Position
• Invest to grow
• Effort on maintaining strength

 Invest to Build
• Challenge for leadership
• Build selectively on strength

 Build Selectively
• Invest in most attractive segment
• Build up ability to counter competition
• Emphasize profitability by raising productivity
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 Corporate and Division Strategic Planning
 Strategies
 Protect & Refocus
• Manage for current earning
• Defend strength

 Selectivity for Earning

• Protect existing program
• Investments in profitable segments

 Build Selectively
• Specialize around limited strength
• Seek ways to overcome weaknesses
• Withdraw if indication of sustainable
growth are lacking
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Corporate and Division Strategic Planning
 Strategies
 Limited Expansion for Harvest
• Look for ways to expand

without high risk

 Manage for Earnings
• Protect position in profitable segment
• Upgrade product line
• Minimize investment

 Harvest
• Sell at time that will maximize cash value
• Cut fixed costs and avoid investment
meanwhile
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Corporate and Division
Strategic Planning
 Critique of Portfolio Models
 Planning New Businesses,
Downsizing Older Businesses

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 Corporate and Division
Strategic Planning
 Strategic Planning Gap

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 Corporate and Division
Strategic Planning
 Strategic Planning Gap
 Intensive Growth

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 Corporate and Division
Strategic Planning
 Strategic Planning Gap
 Integrative Growth
 Backward integration
 Forward integration
 Horizontal integration

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 Corporate and Division
Strategic Planning
 Strategic Planning Gap
 Diversification Growth
 Concentric diversification strategy
 Product baru bagi konsumen baru (tanpa merubah
core product/bisnis)
 Horizontal diversification strategy
 Pemanmbahan variasi/fitur produk
 Conglomerate diversification strategy
 Inovasi/ product baru (merubah core product/bisnis)

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 Corporate and Division
Strategic Planning
 Strategic Planning Gap
 Downsizing Older Businesses

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

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 Business Unit
Strategic Planning
 Business Mission
 SWOT Analysis
 External Environment Analysis
(Opportunity and Threat Analysis)
 Marketing Opportunity
 Buying opportunity more convenient or
efficient
 Meet the need for more information and advice
 Customize an offering that was previously only
available in standard form

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Matrix SWOT

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 Matrix SWOT

Strength Weight very weak weak average strong very strong total
Unique brand image 0.118 4 0.472
Strong marketing Channel 0.103 5 0.515
High Brend Awareness 0.111 2 0.222
Competitive price 0.195 3 0.585
Excellent Service 0.119 1 0.119
Sub Total 0.646 1.913
Weaknessess
Birocative structure 0.123 2 0.246
low customer contact 0.11 4 0.44
old technology applicant 0.121 3 0.363
Sub Total 0.354 1.049
Total 1 0.864

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 Matrix SWOT

Opportunity Weight very weak weak average strong very strong total
Big Market Share 0.235 2 0.47
Low Competition 0.221 4 0.884
Good Government rule 0.147 3 0.441
Good Economics Condition 0.195 3 0.585
Sub Total 0.798 2.38
Threats
Strong Competitor 0.154 2 0.308
Smart Customer 0.171 4 0.684
Sub Total 0.202 0.992
Total 1 1.388

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 Matrix SWOT
O

Aggressive
Strategy

W S

T
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 Business Unit
Strategic Planning
 Goal Formation
 Strategic
Formulation
 Strategy

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 Business Unit
Strategic Planning
 Porter’s Generic Strategies
 Overall cost leadership
 Differentiation
 Focus

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Travelocity’s Web site helps the consumer plan the
whole vacation – flights, lodging, and car
rental.com

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 Business Unit
Strategic Planning
 Operational Effectiveness and Strategy
 Strategic group
 Strategic alliances

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 Business Unit
Strategic Planning
 Marketing Alliances
 Product or service alliances
 Promotional alliances
 Logistical alliances
 Pricing collaborations
 Partner Relationship
Management, PRM
 Customer Intimacy
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 Business Unit
Strategic Planning
 Program Formulation and Implementation

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 Business Unit
Strategic Planning
 Feed Back and Control

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 The Marketing Process
 Traditional Physical  Value Creation and
Process Sequence Delivery Sequence
 Choose the value
 Make the product
 Segmentation
 Design product
 Market selection
 Procure
 Value positioning
 Make
 Provide the value
 Sell the product  Product development
 Price  Service development
 Sell  Pricing
 Promote  Sourcing making
 Distribute  Distribute service
 service  Communicate the value
 Sales force
 Sales promotion
 Advertising 4-45
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The Marketing Process
 Steps in the Planning Process
 The marketing process
 Analyzing Market Opportunities
 Developing Marketing Strategies
 Planning Marketing Programs
 Managing the Marketing Effort
 Annual-plan control
 Profitability control
 Strategic control
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Figure 4-10:
Factors
Influencing
Company
Marketing
Strategy

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Product Planning: The Nature and
Contents of a Marketing Plan
 Contents of the Marketing Plan
1. Executive Summary
2. Current Marketing Situation
1. Market Summary
1. Market profile
1. Demographics
2. Geographic
3. Behavior Factors
2. Market Needs
3. Market Trends
4. Market Growth
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Product Planning: The Nature and
Contents of a Marketing Plan
 Contents of the Marketing Plan
3. Opportunity and issue analysis
1. SWOT Analysis
1. Strength
2. Weaknesses
3. Opportunity
4. Threats
2. Competition and Close Competitor
3. Product Offering
4. Keys to Success
5. Critical Issues
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Product Planning: The Nature and
Contents of a Marketing Plan
 Contents of the Marketing Plan
4. Objectives
1. Mission
2. Marketing Objectives
3. Product Objectives
4. Goals

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Product Planning: The Nature and
Contents of a Marketing Plan
 Contents of the Marketing Plan
5. Marketing strategy
1. Target market
2. Positioning
3. Main Strategies
4. Marketing Mix
1. Product
2. Price
3. Promotion
4. Place

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Product Planning: The Nature and
Contents of a Marketing Plan
 Contents of the Marketing Plan
6. Action programs
1. Scenario planning
7. Financial projections
1. Break event analysis
2. Sales forecast
3. Capital budgeting
1. NPV
2. IRR
3. Payback Period

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Product Planning: The Nature and
Contents of a Marketing Plan
 Contents of the Marketing Plan
8. Implementation and controls
1. Control
1. Revenue
2. Expenses
3. Customer satisfaction
4. Product development
2. Implementation
1. Difficult and risk
3. Contingency planning

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Product Planning: The Nature and
Contents of a Marketing Plan
 Sample Marketing Plan: Sonic Personal
Digital Assistant
 Current Marketing Situation
 Opportunity and Issue Analysis
 Objectives
 Action Programs
 Financial Projections

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Product Planning: The Nature and
Contents of a Marketing Plan
 Implementation Controls
 Marketing Strategy
 Positioning
 Product Management
 Pricing
 Distribution
 Marketing Communications
 Marketing Research

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