strategic business planning for marketers- intro “no matter how good your product is-you are...
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Strategic Business Planning for Marketers- intro
“No matter how good your product is-you are always exactly 18 months away from complete
failure.” Nathan Myhrvold, CTO Microsoft
Prepared by: Geoff Linton
Fall ’06 Week 1&2
Course Outcomes
• Business Planning
• Critical Thinking
• Team Work
Course shows the ultimate big company approach which is very different than small companies.
Strategic Management Defined
• Set of managerial decisions and actions which determine the long-run performance of a firm.
• NOT ALL DECISIONS ARE STRATEGIC!• Criteria:
– Rare– Consequential– Directive
Customers
Relationships
Environmental Forces
Shareholders(owners)
The OrganizationSociety Society
Suppliers
Social RegulatoryTechnologicalEconomic Competitive
OtherOrganizations
Alliances
Partnerships
Ownership
An Organization Involves Many People, Stakeholders, Groups, and Forces
HumanResources
Researchand
Development
InformationSystems
Manufacturing
Finance Marketing
Management& Owners
Mission
MarketOpportunity
Segmentsand Targets
EnvironmentalAssessment
SW OTAnalysis
Chasm &PLC
MarketResearch
ProspectProblems
BalancedScorecardand KeyMetrics
BusinessModel
(topline)
Market Sizing
SalesAnalysis
ProductProfitability
QuantitativeAnalysis
W in/LossAnalysis
SCA or CoreCompetence
FinancialProjections
ElevatorPitch
TargetAudience
Profile
ReferencableCustomers
Business Case
Buy, Build orPartner
Pricing
ThoughtLeaders
StrategicPlanning
MRD
ProductDefinition
(topline sol'n& workflow)
ProductPositioning
(FFB , s tm t, grid , 1m essage)
SalesProcess
Roll-outProcess"Launch"
IntegratedM arketing
Communication
ProductContract
Requirements
Marketing Mix
M arketingPlan plus
Comm Plan
Brand W heel
MarketingProject Plan
& Briefs
PublicRelations &
PressPublicity
SpeakingEngagements
Direct Mail
ProductPositioning
Presentation
KeyDeliverables/Milestones
ResponsibilityMatrix/ Scorecard
Core SkillsRequired
Org ChartPresent &
Future
"Bridge" SkillsSets
JobDescriptions
ScreeningTools
Cross SkillsMix
SellingTools
Testimonials
W hite Papers
CostJustification
News Flash
CompetitiveW rite-up
W eb Cast/W ebinar
CompetitiveProfiles &
Intelligence
Sales Plan
ExecDeliverables
IndustryPositioning
TechnologyAssessment
IndustryForces
CompetiitiveReview
BestPractices
Audit
Barriers toEntry
ValueProposition
Key Pillarsand
Milestones
Critical FactDeck and
Trends
FundingSources
Financial andOther
Benchmarks-industry
ReleaseMilestones
ProductRoadmap
Bulletins
Partners,Alliances &
Stakeholders
Demonstration
PrintedCollateral
ElectronicCollateral
W eb Site
EmailMarketing
lettersnewsletters
lifecycleSeminars andTrade Shows
ModelsCasesProof
Telephone
Face to Face
SalesTraining
SalesReadiness
Basic SalesProcess (8s teps , se ll cyc le)
SalesBlueprint
ProspectingLead
Generation(Target List)
Meetings
Selling Style
CustomerCare
E W ebE-Mail
PhoneSupport
ServiceSnapshots(Bulletins,
Templates)
ContingencyPlan 3T 's -risks and
issues
ManagementExperience
FinancialTrack Record
Financing
SalesTraining
Documentation
Proposals
Closing
FunnelManagement
(top 20 c lub, funnelveloc ity, c lose loop)
ChannelSupport
SpecialCalls
CorporateVisit
Innovation
Product MarketGrids
Objections
ProductPositioning
Stmt (30, 60& 150 word)
E-Support(know ledgeba
se, w eb, e-m ail)
HumanResources
M arketAssessment
ProductPlanning
BusinessPlan
Governance
GatingProcess
(mktg & tech)
STPSummary
Cust. BuyingProcess
ElectronicMktg &
Collateral
CompetitiveW rite-up
GatingProcess
(mktg & tech)
Course Introduction
Week 1
What is Strategy?
“Strategy is the direction and scope of an organization over the long term, which achieves advantage for the organization through its configuration of resources within a challenging environment, to meet the needs of markets and to fulfill stakeholder expectations”
Source: tutor2u Pattern of decisions
What is the Strategy?
• Identify competitive approach– Low-cost leadership– Differentiation– Focus on a particular market niche
• Determine competitive scope– Stages of industry’s production/distribution
chain– Geographic coverage– Customer base
• Identify functional strategies• Examine recent strategic moves
Virgin Atlantic & Samuel Adams beer
2.4 Hierarchy of Strategy – Strategic Alignment
Corporate StrategyStrategic
(Grow Internationally)
Business(Division Level)
Tactical(grow via M and A - which co to buy,
which parts to keep)
FunctionalStrategy
Operational
(Make Payments, Who to fire/hire)
3 Scopes of Strategies (p8)
1. Corporate Strategy• “Overall direction of the company & Mgmt of businesses”
– Mission & vision– attitude toward growth– portfolio analysis– parenting
2. Business Strategy• “Competitive and Cooperative strategies”
– business unit– Competitive & cooperative focus Objectives, Strategies, Policies
3. Functional Strategies• “Maximize Resource Productivity”
Programs, Budgets, Procedures
Results of strategy formulation
• Vision and mission
• Objectives
• Policies
• Programs
• purpose and reason for existence
• quantifiable end results of planned activity
• broad guidelines
• steps needed to accomplish plan
Each Functional Area Has a Number of Sub-Strategies & Tactics
PlaceOutletsChannelsCoverageTransportationStock level
PlaceOutletsChannelsCoverageTransportationStock level
PromotionAdvertisingPersonal sellingSales promotionPublic Relations
PromotionAdvertisingPersonal sellingSales promotionPublic Relations
PriceList priceDiscountsAllowancesCredit itemsPayment period
PriceList priceDiscountsAllowancesCredit itemsPayment period
ProductFeaturesBrand namePackagingServiceWarranty
ProductFeaturesBrand namePackagingServiceWarranty
Marketingmanager
Marketingmanager
Cohesive marketing mix
PromotionPlace
Price
PromotionPlaceProduct
What is a Strategic Plan?
Where firm is headed -- Strategic Vision (what you are capable of becoming) and business Mission (main pillars)
Action approaches to achieve targeted results -- A comprehensive strategy
Short and long term performance targets -- Strategic and financial objectives
Tests of a Winning Strategy
• GOODNESS OF FIT TEST
– How well is strategy matched to firm’s situation?
• COMPETITIVE ADVANTAGE TEST
– Does strategy lead to sustainable competitive advantage?
• PERFORMANCE TEST
– Does strategy boost firm performance?
Unit 2 – The Process
Basic Concepts of Strategic Management
2.1 Strategic versus Functional
• What market to be in?• Open a new production facility?• # people to schedule for tonight’s shift?• Buy a new workstation PC?• Buy SAP system?• Change benefit program design?
2.1 Triggering Events
• Unlikely to be regular, scheduled process today• Triggering event stimulates a change or review of
strategy and new decisions:– New CEO– External Intervention– Change of Ownership– Performance Gap– Inflection Point (new technology, regulatory change,
customer values or preferences change)
2.2 Three Phases of Planning
• (1) Scanning and Analysis – (units 1,2,3,4)
• (2)Formulation and Choice – (units 5,6,7,8)
• (3) Implementation and (4) Follow-up – (units 9,10)
Each component must be executed well in order for the entire process to be successful!
Many organizations spend too much time on 1 and 2 and not enough on 3 and 4
2.3 Four Phases of Strategic Management Development
• Stage 1 -Basic financial planning ($’s)– Improve $ but create negative long term impacts
• Stage 2 - Forecast-based planning (sales, production, manpower levels)– Inwardly focused and ignore changing reality
• Stage 3 - Externally-oriented planning (markets, industry, benchmarking)– Goals not attainable, ignore internal resources and ability
• Stage 4 – Full Strategic management (people, markets, numbers, industry, production . . .)– Combines external reality and internal resources to improve
financial position
2.3 Strategic Management
• Benefits of linking processes, systems, people together:– Clearer sense of strategic vision for the firm for
investors, shareholders, employees– Sharper focus on what is strategically important– Invest money on what is important– Clearer priorities for staff– Improved understanding of a rapidly changing
environment– Less likely to generate “busy work” via outdated
systems and processes
Evaluation and Control
and ControlStrategy Formulation
Strategy Implementation
Mission
Objectives
Strategies
Policies
Feedback/Learning
Environmental
Scanning
Societal Environment
General Forces
Task Environment
Industry Analysis
Structure Chain of Command
Resources Assets, Skills
Competencies, Knowledge
Culture Beliefs, Expectations,
Values
Reason for existence
What results to accomplish by when Plan to
achieve the mission & objectives Broad
guidelines for decision making
Programs
Activities needed to accomplish a plan
Budgets
Cost of the programs Procedures
Sequence of steps needed to do the job
Process to monitor performanceand take corrective action
Performance
External
Internal
Evaluationand Control
2.4 Strategic Management Process Model
Two Approaches to Corporate Strategic Planning
• Emergent Approach• strategy simply evolves from a stream of decisions• deal with issues as they come up• from grass roots/bottom upwards• rely on spontaneity (don’t always make a plan for
everything)• managers learn as they go
• Deliberate Approach• proactively try to steer the organization with plans &
process• usually started from the top• use static strategic frameworks to allign (SBU’s) & plan
intended course• track, report & measure progress• good for mature businesses
2.5 Mintzberg’s Strategy Modes
• Entrepreneurial– One powerful individual, founding vision
• Adaptive– Reactive solutions to existing problems (emergent)
• Planning– Systematic info gathering, focus on analysis (deliberate)
• Logical Incrementalism– Top set goals, interactive process and continuous
learning
Execution … Where Companies Fall Down
Competent execution of a well-conceived strategy is the best test
of managerial excellence and a proven recipe for organizational
success!
Good Strategy + Good Strategy Execution = Good Management
2.7 Tips for making better decisions
• Use the 8 step process • Analyze current performance ROI and posture• Review corporate governance (role of board)• Do more detailed external scan (beyond
generalities) O and T• Do more detailed internal scan (S and W)• Really assess SWOT and make balanced decisions• Implement with programs, budgets and
procedures• Evaluate, feedback and control properly
– We will learn techniques for doing each one of these items in this course!
Geoff’s Approach to the Corporate Planning Process
External Situation Assessment (1a)•Environmental Analysis•Market/Industry Analysis•Competitor Analysis•Customer Analysis
Internal Situation Assessment (1b)•Portfolio Analysis•Performance Analysis•Capabilities•Sustainable Competitive Advantage•Resources
SWOT Summary (1c)Corporate Objectives
& Vision
Strategic Alternatives & Selection
•Levers & Thrusts •Four Market Product Strategies grid Deliverables, Action Plan, & Measurement
Unit 2 – Did You Get It?
1. Why has strategic management become so important to today’s organizations?
2. How does strategic management typically evolve in an organization?
3. In what ways could a typical organization’s strategic management process be improved ?
Why Do Strategies Evolve?
• There is always an ongoing need to react to– Shifting market conditions– Fresh moves of competitors– New technologies– Evolving customer preferences– Political and regulatory changes– New windows of opportunity– Crisis situations
Discussion Questions (cont’d)
4. How are strategic decisions different from other kinds of decisions?
5. When is the planning mode of strategic decision making superior to the entrepreneurial and adaptive modes?
6. What are common differences between functional and strategic actions and decisions?
32
Unit 1 – Generic Competitive Strategies
Competitive Strategies
– Focuses on improving the competitive position of a company’s or business unit’s products or services within the specific industry or market segment that the firm has CHOSEN to serve.
– Firms make decisions about (1) how broadly or narrowly to define their target markets and (2) the basis on which they will compete
Porter’s Competitive Strategies
• Generic Competitive Strategies:– Lower cost strategy
• Design, produce, market more efficiently than competitors
– Differentiation strategy• Unique and superior value in terms of product
quality, features, service
Porter’s Generic Competitive Strategies
Porter’s Competitive Strategies
• Cost Leadership:– Low-cost competitive strategy– Aimed at broad mass market– Need to achieve:
• Aggressive construction of efficient-scale facilities• Cost reductions• Cost minimization
Porter’s Competitive Strategies
• Differentiation:– Broad mass market– Unique product or service– Need to:
• Charge premiums• Lower customer sensitivity to price by offering unique
features or benefits• Make it hard for competitors to copy your product
Porter’s Competitive Strategies
• Focused Cost Leadership:– Low cost competitive strategy– Focus on particular buyer group or market– Need to:– Stay focused on niche (don’t try to please all)– Seek cost advantage only in target market
Porter’s Competitive Strategies
• Focused Differentiation:– Focus on particular group or geographic
market– Seek differentiation in targeted market
segment– Serve special needs of narrow target market
Porter’s Competitive Strategies
• Stuck in the middle:– No competitive advantage (not cost, not
differentiation, no niche)– Will result in below-average performance
Risks of Cost Leadership
Cost leadership is not sustained:• Competitors imitate.• Technology changes.• Other bases for cost leadership erode.Proximity in differentiation is lost.Cost focusers achieve even lower cost in segments.
Risks of Differentiation
Differentiation is not sustained:• Competitors imitate.• Bases for differentiation become less important to buyers.Cost proximity is lost.Differentiation focusers achieve even greater differentiation in segments.
Risks of Focus
The focus strategy is imitated:The target segment becomes structurally unattractive:• Structure erodes.• Demand disappears.Broadly targeted competitors overwhelm the segment:• The segment’s differences from other segments narrow.• The advantages of a broad line increase.New focusers subsegment the industry.
Risks of Generic Competitive Strategies
Key Element? VALUE
• Defining, capturing and measuring VALUE – Shareholders – ROE, P/E, ROI . . .– Customers – relationship, delivery, image, price, product . . .– VALUE delivers above average returns within the industry (Ex. Unit 1
Chart)• You need to define and create VALUE
– Define the shareholder value gap– Define the customer value proposition– Establish objectives and time lines– Identify value creating processes– Create readiness within the organization– Fund the strategic initiatives (let some other things go!)
• Example: Allstate Insurance
One Page McKinsey handout
Assignment 1(Part A): Generic Strategies
Lower Cost DifferentiationN
arro
w T
arge
tB
road
Tar
get
Competitive AdvantageC
om
pet
itiv
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Instructions: Place the leading athletic footwear companies on the matrix.
Names: ___________________________ ___________________________
___________________________ ___________________________
Assignment 1 (Part B): Describe Your Thinking
Company Why did you place it there on the matrix?
Chief Competitor
Assignment 2: 8-Step Strategic Decision-Making Process
• Based on the 8 step process (p. 14-15)– Form into your BSG-Online teams.– Outline the first steps of your company’s Strategic
Decision-Making process.• 1a. Evaluate current performance results• 1b. Determine your team’s MISSION, OBJECTIVES &
STRATEGIES (for 1st practice year)
– Put your full names on the sheet!– You have 20 minutes to complete the exercise.
Names: ___________________________ ___________________________
___________________________ ___________________________
Assignment 2: Strategic Decision-Making Process
tep 1 – Examine and Evaluate your current:
PerformanceResults
Mission
Objectives
Strategies
Appendix
Thinking Strategically:The Three Big Strategic Questions
1. Where are we now?
2. Where do we want to go?
– Business(es) to be in and market positions to stake out?
– Buyer needs and groups to serve?
– Outcomes to achieve?
3. How do we get there?
Note: Harvard formula case method
Types of Objectives Required
Outcomes focused on improving financial performance
Outcomes focused on improving long-term, competitive business position
Financial Objectives Strategic Objectives
$
Categorize the objectives on p7
Performance strategies Focus On “Bottom Line” Criteria
Profits Revenue
OtherCosts
Minus
=
UnitMargin
Unit SalesTurnover
Price
Product Cost
MarketShare
MarketSize
Times
Minus
Quotes to Keep in Mind...
• “Writing a business plan forces you into disciplined thinking if you do an intellectually honest job. An idea may sound great in your own mid, but when you put down the details and numbers, it may fall apart.” – Eugene Kleiner, Venture Capitalist
• “Talent comes from the non-conformists & rebels...”– David Ogilvy, Advertising Guru
• “but you also need a multi disciplined and aligned team!”
• “If your idea is such a great one why hasn’t someone else done this before?– Geoff Linton, “Marketing Coach”