Marketing Planning Advanced Diploma in Marketing 2010/11 Semester 02

Lecture 02

Department of Marketing Management University of Sri Jayewardenepura Faculty of Management studies and Commerce

Marketing planning
Discussion 1. What marketing plan is? 2. Why is marketing planning important? 3. What are the objectives of marketing planning? 4. What are the Criticisms of marketing planning? 5. What are the Standard Planning Framework/process

What Marketing planning is?

The central instrument for coordinating the marketing efforts directing and

Simply a logical sequence and a series of activities leading to the setting of marketing objectives and the formulation of plans for achieving them.

Objectives of the marketing plan

Acts as a roadmap assist in management control and monitoring the implementation of strategy informs new participants in the plan of their role and function to obtain resources for implementation to stimulate thinking and make better use of resources Assignment of responsibilities, tasks and timing Awareness of problems, opportunities and threats #

Why is marketing planning essential?

Increasing turbulence, complexity & competitiveness The speed of technological changes The need for you;
To help identify sources of competitive advantage To force an organized approach To develop specificity To ensure consistent relationships #

Cont: the need for superiors to inform The need for non-marketing function to get support The need for subordinates;
To get resources To gain commitment To set objectives and strategies

Cont: management focus

Systematic futuristic/advanced thinking by management better co-ordination of company efforts development of better performance standards for control sharpening of objectives and policies better prepare for sudden new developments managers have a vivid sense of participation

Criticisms of marketing planning

Formal plans can be quickly overtaken by events Elements of the plan my be kept secret for no reason gap between senior managers and implementing managers Essential marketing information may have been missing if implementation is not carefully controlled by managers, the plan is worthless!
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Behavioural planning problems

Resistance and non-co-operation by managers in planning fear of uncertainty in planning: a lack of comfort in planning activities political interests in planning activities: resource bargaining, padding of requirements, and avoidance of consensus planning avoidance: compliance rather than commitment to planning
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Advisory notes for effective planning

Dont blindly rely on mathematical and statistical calculations. Use your judgement as well Dont ever assume that past trends can be exploited into the future forever If drawing conclusions from statistical data, make sure the sample size is sufficiently large
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Standard Planning Framework & Different plans

How marketing planning fits in with strategic & tactical plans Corporate , Business & other functional plans?????

Standard Planning Framework

Analysis - where are we now? Objectives - where do we want to be? Strategies - which way is best? Tactics - how do we ensure arrival? Control - are we on the right track?

Strategic & tactical plans

Strategic plan (SP) Tactical plan (TP)

the managerial process of specifies the functional tactics developing and maintaining a including finance, marketing, viable fit between the HRM, production etc. organizations objectives, skills and resources with its changing marketing opportunities
A plan covers a period beyond Covers in quite a lot of detail the the next financial year Usually action to be taken, by whom, this is for between 3-5 years. during a short-term planning period. This is usually for one year or less Concerned with overall, long- Concerned with day-today term organizational direction performance & results

Strategy & Tactics

Strategy (doing the right things) Effective Ineffective

Efficient
Tactics (doing
things right)

Thrive
1

Thrive

Die Slowly Die Slowly 4

Die Quickly Die Quickly 3 #

2ve

Survive Inefficient 2

Strategy & Tactics old style Board Mgt. Senior Mgt.

Middle Mgt.
Operations
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Strategy & Tactics Modern view Board Mgt. Senior Mgt.

Middle Mgt.
Operations
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Benefits of strategic planning

Encourage management to think ahead systematically Forcing management to clarify objectives and policies Helping the company to anticipate and respond quickly to environmental changes and sudden developments. Aiming to shape and reshape the companys business
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3 key areas of action in strategic planning

Managing a companys businesses as an investment portfolio Assessing each business strengths (by the market growth rate & companys position) & fit it in that market opportunities Establishing a strategy
Thus aim of strategic planning is to shape and reshape the companys businesses and products so that yield target profit and growth

4 levels of strategic planning

1. Corporate level 2. Business unit level 3. Functional level

1.Corporate strategic planning

Four Planning activities; 1.Define the Corporate mission 2.Establishing Strategic Business units (SBUs) 3.Assigning resources to each SBU 4.Assessing growth opportunities (Planning new Businesses)
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Define the Corporate mission

Explain why an organization exists - to accomplish something Mission provides employees with a shared sense of purpose, direction and opportunities

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Cont; mission
To define company mission, the company should address the following classic questions;

What is our business? Who is the customer? What is of value to the customer? What will our business be? What should our business be?

Peter Drucker

Criteria For Good Mission Statement

Market-oriented, Realistic, Specific Focus limited no of goals Polices and values Major competitive spheres within the company as; - Industry - Product and applications -Competence -Market segment -Vertical scope -Geographical scope #

Establishing Strategic Business Units

It is a single business or collection of related business It has its own set of competitors It has a manager who is responsible for strategic planning & profit performance and who controls most of the factors affecting profit.
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Purpose of establishing Strategic Business Units/ SBUs To develop and assign appropriate findings

Thus, to assign resources to each SBU the company needs to evaluate their business portfolio

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Evaluating the Business Portfolio

The business portfolio is the collection of businesses and products that make up the company. The company must:
analyze its current business portfolio or Strategic Business Units (SBUs), decide which SBUs should receive more, less, or no investment, develop growth strategies for adding new products or businesses to the portfolio.

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Business Portfolio Evaluation Models

1.Boston Consulting Group Model (BCG Growth-Share Matrix) 2.General Electric Model

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BCG Growth-Share Matrix

Relative Market Share
High Low

Market Growth Rate

High

Stars

Question Marks

Cash Cows

Dogs

Low

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Strategies for each cell in the matrix

Cell Strategy Used to fund future product and Question mark to help them gain share to become stars Maintain the dominant Share Those with high potential to become stars will require very high investment for market share growth Others should be liquidated or divested (sold) quickly Dogs Immediate exit, harvesting ( milking for whatever cash that can be generated # Niche marketing 29

Cash cows Stars Question Marks

Assessing Growth Opportunities

Involves planning New Businesses, Downsizing or terminating Older Businesses

Analyze existing and future desired sales and profits

If there is a gap between future desired sales and projected sales corporate management will have to develop or acquire new business to fill this strategic gap.
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Sales

Desired Sales

Strategic Planning Gap

Current Portfolio Time ( Years)

10

A company can fill the strategic planning gap in three ways.

Intensive Growth (Father growth within current business) Market Penetration

Market

Integrative Growth ( build or acquire current business)

Diversification Growth (Add new businessunrelated)

Development
Product Development

Concentric Backward Integration Diversification Forward Integration Horizontal Diversification Horizontal Integration Conglomerate Diversification # 32

Task: Marketing efforts of Strategic Planning Gap are guided by several marketing strategies.
1. What types of strategies can be used for
strategies planning gap?

2. Recommend one of the most appropriate models that can be applied to fill strategic planning gap?

Intensive Growth: First review whether there are

any further opportunities for improving the performance of its existing business . An established firm has a base on which to build and momentum that can be exploited. The firm may have experience, knowledge and resources already in place.
Ansoffs proposes a useful framework for detecting new intensive growth opportunities called Product

Market

Expansion Grid
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Product/Market Expansion Grid

Existing Products Existing Markets New Markets 1. Market Penetration 2. Market Development New Products 3. Product Development 4. Diversification

Market Penetration Strategy

Looks for ways to increase the market share of its current products in their current market. This is the lowest risk option of the matrix because it does not involve investment in new products. Growth can be achieved in existing product markets by increasing share through Capturing sales held by competitors ( increase market share) Increasing product usage among existing customers

Attract non and new users

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Product Development Strategy:

Include the addition of product features, the development of a new generation product and development of new product for an existing market. This option is relatively high risk because of the cost of developing new product although sold to existing buyers. Product Quality improvements durability, reliability, overall performance Style improvement: Increase the aesthetic appeal for the product. It might confer a unique market identity and win a loyal following. #

Market Development Strategy:

Marketing of existing product to new target markets. It is relatively low risk option because no new products are involved. With market expansion, the same expertise and technology and some times even the same plant and operations facilities can be used. Ways to expand the market: Usage : The nonuser can be stimulated. Distribution Channel: Opening up new channels

Expanding geographically: consider selling in new locations.

Age : The same product can be aimed at different age groups #

Diversification Strategy:
Venturing into a new business to exploit growth opportunities in that area. This is a high risk move because of the unfamiliarity with the new business. This make sense when good opportunities can be found outside the present business. A good opportunity is one where the industry is highly attractive and the company has the mix of business strength to be successful. Types of diversification: 1. Related diversification (Concentric diversification and Horizontal diversification) 2. Unrelated diversification (Conglomerate diversification)#

Cont:Diversification Strategy:
1. Related diversification Concentric diversification - same technology with existing product lines appeal to different customer s Horizontal diversification new product with unrelated technology current customers

2. Unrelated diversification
Conglomerate diversification Totally new business- no relationship to its current technology or product or market

Business Unit Strategic Planning

Each business unit needs to develop its specific plans within the broader corporate plan.
The business unit strategic planning consists of the flowing 7 steps;

Business Mission
External Environment Internal Environment

Goal Formulation Strategy Formulation

Program Formulation Implementation Feedback & Control #

Task 02
Michael Porter has proposed 3 generic
strategies that provide a good starting point for strategic thinking. 1. Explain these by using practical examples in Sri Lankan Context.

Michael Porters 3 generic strategies

Cost Leadership Strategy

Increasing profits by reducing costs, while charging industry-average prices. Increasing market share through charging lower prices, while still making a reasonable profit on each sale because you've reduced costs. Ex: Siddhalepa
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Focus Strategy
Companies that use Focus strategies concentrate on particular niche markets and, by understanding the dynamics of that market and the unique needs of customers within it, develop uniquely low cost or well-specified products for the market. Because they serve customers in their market uniquely well, they tend to build strong brand loyalty amongst their customers. This makes their particular market segment less attractive to competitors. Ex: Sampath bank #

Differentiation Strategy
Differentiation involves making your products or services different from and more attractive those of your competitors. How you do this depends on the exact nature of your industry and of the products and services themselves, but will typically involve features, functionality, durability, support and also brand image that your customers value. Ex:- Micro car
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Functional plans: Marketing Planning

The marketing plan is the central instrument for directing and coordinating the marketing efforts

The marketing planning operates at two (02) levels; 1. Strategic marketing plan 2. Tactical marketing plan
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Strategic Marketing & tactical Marketing plans

Strategic marketing plan Tactical marketing plan
Layout the target markets and Specifies the marketing tactics the value proposition that will be including product, price, place, offered based on analysis of the promotion & service features. best market opportunities. Develop broad marketing objectives & strategies based on an analysis of the current market situation & opportunities. Develop specific actions /strategies relating to specific plans eg. Product plan. Promotion plan

Concerned with overall, long-term Concerned with day to day organizational direction performance & results Provides the long-term