Marketing Strategy: Strategic Planning

Marketing Strategy

• Strategic planning is a process describing an organizations direction within its chosen environment.
• Strategic planning also guides the allocation of resources and efforts.

Strategic Planning Process Steps

• Define the mission.
• Perform an external assessment of threats and opportunities.
• Perform an internal assessment of strengths and weaknesses.
• Establish a set of priorities.
• Determine which strategies to pursue.

Defining Organizational Mission (Step 1)

• An organization's mission is its fundamental purpose for existing.
• It defines who the organization is, its values, and the customers it wishes to serve.
• The mission acts as a blueprint for management in developing business strategies and it must recognize what the business is and what the consumers want,
• It is important to avoid marketing myopia.

Organizational Mission Components

• Basic product or service, primary market, and technology when delivering a product or service.
• Organizational goals include growth, profitability, stability and survival.
• Organizational philosophy.
• Organizational self-concept.
• Public image.

Mission and Vision

• A mission statement defines what an organization is, why it exists and its reason for being.
• A vision statement describes where the company aspires to be upon achieving its mission.

External Assessment

• External opportunities provide a means for an organization to improve its performance and competitive advantage in a market environment.
• External threats are aspects from an organization's outside environment that can adversely affect its performance or the achievement of its goals.
• Stronger organizations can face a greater level of external threats than weaker ones.

SWOT Analysis

• SWOT Analysis is a framework for analyzing an organization's strengths and weaknesses and the opportunities and threats it faces.
• SWOT analysis helps focus of strengths, minimize threats and take advantage of opportunities.
• Strengths and Weaknesses are internal
• Opportunities and Threats are external
• Strengths and Opportunities are helpful to achieving objectives.
• Weaknesses and Threats are harmful to achieving objectives.

Organizational Objectives

• Organizational objectives are short and medium term goals.
• They play a large art in developing organizational positions and determining the allocation of resources.

Public Image

• Public image is the perception people have of your business when they hear your company name.

Organizational Philosophy

• An organization's philosophy is its distinctive and enduring principles and values that guide employees.

Organizational Self-Concept

• Self concept refers to the entirety of belief, attitudes and opinions that each person holds about their personal existence.
• Positive self concept should to to be considered and reinforced among employees.

Situational Assessment

• Situational assessment covers economic, competitive, regulatory, social and technological changes in the marketplace.
• To assess this ask, what are the changes and trends?, and how will these changes affect the organization? Also, what opportunities to these changes present?
• Situational Assessment also accounts for Barriers to entry are conditions that a company must overcome in order to pursue a business opportunity.
• Barriers to exit are cost of leaving a particular business line.
• Differential advantage product, market, cost must be based on core competencies.
• There are also criteria of Importance, Perceived, Uniqueness and if it is Sustainable.
• Sources: Product, market, cost, trust (unique to healthcare).

Organizational Strategy

• Broad strategies are formulated as growth market or consolidation strategies.
• In growth market, the organization attempts to gain more sales from an existing business line or penetrating new markets.
• In Consolidation, this involved pairing either services or markets.

Growth Market Strategies

• Market Penetration: Increasing sales of present products/services in present markets.
• Market Development - Increase sales in new markets.
• Product Development - Introduce new products/services to present markets.
• Diversification - Introduce new products into new markets.

Production Development Strategy

• Vertical Integration:
• Backward integration means an organization becomes its own supplier
• Forward integration means an organization offers new services closer to the customer.

Diversification Strategy

• Strategic Alliances - Formal arrangements with other companies to operate in a particular market.
• Joint Ventures - New corporate entities created by strategic alliances

Consolidation Strategies

• Divestment - Selling off a business or product line.
• Pruning - Reducing the number of products or service offerings.
• Retrenchment - Withdrawing from certain markets.
• Harvesting - Gradually withdrawing support from a product until market demand is reduced or eliminated.

Alternative Models

• Boston Consulting Group Matrix includes:
• Stars, Cash Cows, Problem Children and Dogs.
• The Matrix is based on Market growth rate and market share, and can be used to focus on broad considerations.
• Stars are high growth, and high market share
• Cash Cows are low growth, but high market share
• Problem Child are high growth, but low market share
• Dogs are low growth, and low market share

Alternative Models

• GE Matrix examines Market attractiveness and Business Strength.
• Market attractiveness considers overall market size, annual market growth rate, historical profit margin, competitive intensity, technological requirements, inflationary vulnerability, energy requirements, environmental impact, social/political/legal issues.
• Business Strength includes market share, share growth, product quality, brand reputation, distribution network, promotional effectiveness, production capacity, production efficiency, unit costs, supply costs, R&D performance, management talent.

Competitive Market

• A competitive market is when many producers compete to provide consumers with goods and services.
• To analyze:
• Existing competition
• Potential competition

Factors affecting competitive intensity in a competitive market

• Threat of new entrants.
• Bargaining power of suppliers.
• Bargaining power or customers.
• Threat of substitute products or services.

Competitive Market - Existing Competition

• Existing competition means When product is relatively standardized and the competitors are relatively numerous and similar in size.
• Also takes into account, when the cost of switching providers is relatively low in Industries characterized by overcapacity and among firms in the market because of a high fixed-asset position.

Competitive Market - Factors

• New entrants
• Threat of substitution
• Bargaining power of suppliers
• Bargaining power of customers

Marketing Plan:

• Marketing plans are blueprints that outlines marketing efforts for the coming year, and also describes the business activities involved in accomplishing specific marketing objectives within a set time frame.
• After establishing marketing objectives, marketing strategies are then formulated, and these strategies outline your overall plan to find clients and customers.

Market Strategy Formulation

• Determine Target market.
• Specify Market strategy.
• Develop tactical plans for marketing mix

Determining Target market

• Whom the organization is trying to attract
• Assess organization's strengths, competitive intensity for target market, the cost of capturing market share, the potential financial gain in attracting the targeted group
• It focuses on Mass Marketing (undifferentiated) or Segmenting There are two options:
• Multi-segment marketing
• Market concentration strategy

Target Market - Multi-segment Marketing

• Firms adopting multi-marketing strategy compete with each other in several distinct geographical markets.
• Firms using multi-marketing avoid other firms serving the entire market with differentiated products and multi market competition has intensified with globalization.

Target Market - Market Concentration Strategy

• Market concentration is where a business focuses on a single market or product.
• It allows a company to invest more resources in production and marketing in that one area but comes with the risk of significant losses if there is a drop in demand.

Specify Market Strategy

• Market leader: Could be a product, brand, company, organization, group name with the highest revenue, dominates market by consumer loyalty, distribution, pricing.
• Market Challenger: the firm has the market share below leader but has enough pressure to attempt gaining control
• Market Follower: firms follow the ways of leaders without taking risks.
• Market Niche: product that is focused to specific subset of market to target smaller market segment.

Tactical Action Plans

• Tactical plans are a course of action to achieve short-term goals, generally within a year or less.
• Includes Advertising strategy, pricing strategy, distribution issues and nature of product.