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7/29/2019 MarketingMy Slides 03

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Chapter 3:

The Role of Marketing in

Strategic Planning

If you do not know where youare going, any road will take

you there!


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Chapter Objectives Explain companywide strategic planning

Understand the concepts of stakeholders,

processes, resources, and organization.

Explain the four planning activities of corporatestrategic planning

Understand the process involved in defining a

company mission and setting goals and objectives.

Discuss how to design business portfolios andgrowth strategies

Explain the steps involved in the business strategy

planning process.


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Strategic Planning

Market-Oriented Strategic Planningis the

process of developing and maintaining a feasible fit

between the organizations objectives, skills, and

resources and its changing marketing opportunities.


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The Aim of Strategic Planning

Strategic planning helps an organization

select and organize its businessin a way that keeps the organization healthy

despite unexpected upsets occurring

in any of its specific business or product lines.

WE

MADE

IT!


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Reasons for Planning

The essence of strategic planning is the

consideration of current decision alternatives

in the light of their probable consequenceover time.

The future is unpredictable but it is not a

random walk. If we do not know where we are going any

road will take us there.


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Three Key Ideas for

Strategic Planning

1. Managing a companys business as an investment

portfolio.

2. Assessing accurately the future profit potential of

each businessby considering the markets growth rate

and the companys competitive position and fit.

3. Underlying strategic planning is that of strategy and

developing a game plan for achieving long-run

objectives.


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Four Major Organizational Levels

Corporate Level: Corporate strategic

plan to guide the whole enterprise.

Division Level: Division plan allocates

funds to each SBU.

Business Unit Level: Business unitstrategic plan.

Product Level: Marketing plan.


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Nature of High Performance Business

Stakeholder: Satisfy the minimum expectations ofeach stakeholder group, such as customers,employees, suppliers and distributors.

Processes: Build cross-functional teams that managecore business processes to be superior competitors(Example: Las Vegas Hilton)

Resources: More companies decide to outsourceless critical resources (personnel, material, machines,information)

Organization:Companies align their organizationsstructure, policies, and culture to changing

requirements of business strategy.


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Corporate Strategic Planning

Corporate headquarters has the

responsibility for setting into motion the

whole planning process. The hospitality industry faces the need for

greater empowerment of employees

The H&T industries are international and

multicultural in nature


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Corporate Strategic Planning

Four planning activities undertaken

by corporate headquarters:

1. Defining the corporate mission.

2. Establishing strategic businessunits.

3. Assigning resources to each SBU.4. Developing growth strategies


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Strategic Management Model

Identify

current

mission,

objectives,

and strategies

Performinternal

analysis to

identify key

strengths &

weaknesses

SWOT,

Strategic

choice

Performexternal

analysis to

identify key

opportunities

& threats

Match

strategy,

structure, and

controls

Design

control

systems

Design

organization

structure

Manage

strategic

change

Corporate-Level

Strategy

Business-Level

Strategy

Functional-Level

Strategy

Global Strategy


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Hierarchy of Strategy

Corporate

Headquarters

Corporate

Strategy

Business

Strategy

Functional

Strategy

Strategic

Business

Unit

Strategic

Business

Unit

Operations FinanceResearch &

Development

Human

Resources

Strategic

Business

Unit

Marketing

Global

Strategy


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Corporate Mission

What business are we in?

What businesses should we be in?

What do we do best?

What are the values/ethics of the firm?

What are the target markets of the firm?

Define business by need rather than product.

- Lodging vs. hotel- Quick service restaurants vs. fast food

hamburgers.

http://www.omnihotels.com/corporate/?topic=mission

http://www.skyinet.net/~four-seasonhotel/mission.htm http://www.sedctourism.com/hik/mission.html


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Mission Statements:

Major competitive scopes

Industry scope

e.g., hotels/resorts &

airlines.

Products andapplications scope

e.g., AA (Sabre, YM but

not airport management).

Competencies scope

(technological/core

competencies).

Market-segmentscope

e.g., upscale vs.budget roadside.

Vertical scope Channel levels from

raw material to final

product (amount ofvertical integration).

Geographicalscope (geographic market

coverage).


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Mission StatementA mission statement provides employees ofthe organization with a shared sense ofpurpose, direction, and opportunity.

Mission statementsshould . . .serve as a guide for what the organizationwants to accomplish.

be market-oriented rather than product-oriented.

be neither too narrow, nor too broad.be motivating.

Mission statements guide the development of

objectives and goals.


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Mission Statement Examples Wal-Mart: To offer all consumers in our

territories all of their household needs in a

manner in which they continue think of usfondly.

McDonalds:To offer the fast food customer

food prepared in the same high quality

manner world wide, tasty and reasonablepriced, delivered in a consistent, low-key

decor and friendly atmosphere.


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A business must be viewed as a customer-

satisfying process, not a goods-producing

process.

Companies should define their business in

terms of customer needs, not products.

Companies have to identify those of itsbusinesses that they must manage

strategically (Example: Holiday Inns, Trailwaysand Delta Steamship Experience).

Establishing Strategic BusinessUnits


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Companies have to identify those of its businesses

that they must manage strategically. These

businesses are called strategic business units.1. It is a single business or collection of related

businesses that can be planned for separately from

the rest of the company.

2. It has its own set of competitors.

3. It has a manager who is responsible for strategicplanning and profit performance and who controlsmost of the factors affecting profits.

Characteristics of a Strategic

Business Unit (SBU)


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Analytical tools are needed for classifying

businesses by profit potential, for decisions

on whether to build, maintain, harvest, ordivestindividual SBUs.

One well-known business portfolio

evaluation models is the BostonConsulting Group (BCG) growth/share

matrix.

Assigning Resources to each SBU


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BCG Growth/Share Matrix

Star Question Mark

Cash Cow Dog

Hig

h

Low

High Low

Mar

ketGrowthRate

Relative Market Share

Example: Company with 10 SBUs

1.00%

20%

Circle size = dollar volume size of SBU

Build or Harvest

Divest or

HarvestHold


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Question MarksHigh growth, low share Build into Stars or phase out Require cash to hold

market share

StarsHigh growth & share Profit potential May need heavy

investment to grow

Cash CowsLow growth, high share Established, successfulSBUs

Produce cash

Dogs

Low growth & share Low profit potentialMarketGrowthR

ate

Low

H

igh

Analyzing Current SBUs:Boston Consulting Group Approach

?

Relative Market Share

High Low


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BCG Growth/Share Matrix

What objective, strategy and budget to

assign to each SBU. Four alternative

objectives can be pursued for each SBU:

Build:Increase SBUs market share.

Hold:Preserve SBUs market share.

Harvest: Increase short-term cash flow.

Divest: Sell or liquidate.


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Figure 3-5:

Market opportunity

identification

through the

product-marketexpansion grid

Developing Growth Strategies

Ansoff product-market expansion grid


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Intensive growth opportunities

Identify further opportunities to achieve growth

within the companys current business.

Market penetration strategy

(increase in existing market + with existing

products)

Market developing strategy(look new markets with current products).

Product development strategy

(Grow in existing market with modified or new

products)


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Diversification growth opportunitiesIdentify opportunities to add attractive

businesses that are unrelated to thecompanys current businesses.

Concentric diversification strategy:

Company seeks new products that have

technological and/or marketing synergy

with existing product lines, even though

the product may appeal to a new class of

customers.



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Horizontal diversification strategy:Company searches for new products that

could appeal to its current customers

though technologically unrelated to itscurrent product line. (Ex. Selling perfume,

T-shirts)

Conglomerate diversification strategy:New business with no relationship to thecurrent technology, products, or markets.

(Ex: selling retirement homes).



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Integrative growth opportunities

Backward integration:A hotel company

acquiring one of its suppliers. (Ex: Marriott

Restaurant Distribution System)

Forward integration:A hotel company

acquiring tour wholesaler or travel agents.

Horizontal integration:A hotel company

acquiring one or more competitors,

provided the government does not bar the

move.



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Integration Growth

Toward the Source of Supply

Toward the Customer

VERTICAL INTEGRATION

Backward

Forward

HORIZONTAL

INTEGRATION Similar

BusinessesAcquired


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Business Strategy

Planning Steps

1. Business missionSpecific mission of each SBU

2. SWOT Analysis

3. Internal environment analysis(strengths and weaknesses)


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Business Strategy Planning

4. Externalenvironmentanalysis

(opportunities and threats)

Key macroenvironmental forces Significan Microenvironmental forces

5. Goal Formulation(What do we achieve?)

Goals should arise from business analysis,not from wishful thinking.

Measurable goals

Profitability, sales growth, market share


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6. Strategy Formulation(How do we get there?)

Every business must tailor a strategy for achieving its

goals

Michael Porters three generic types of strategy:

Overall cost leadership

Differentiation

Focus on narrow market segments

Strategic Alliances: partnership with domestic or

multinational companies that complement or leverage

their capabilities and resources to achieve leadership

nationally or globally.



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7. Program formulation. A company must

develop hiring, training, advertising, and other

programs to support its strategy.8. Implementation. A firm must communicate its

strategy to its employees and it must have the

resources to carry out its strategy.

9. Feedback and control are absolutely necessary

to track results and monitor new developments in the

environment.



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Next

Chapter 4

The Marketing Environment

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