Strategic planning consists of 3 actions broadly:

1. Managing a companies’ portfolios2.Assesing each business’ strength by

considering the market’s growth rate and the company’s position fit in the market.

3.Formulating a game plan for each of its business to achieve long-term objectives.

Winning Markets through Market-Oriented Strategic Planning

Strategic Planning is done in 4 levels-

1.Corporate Strategic Plan- It decides what resources to allocate to which business and what business to diversify into

2. Division Plan- It decides how much funds to allocate to the SBUs.

3. SBU Plan-4. Product Plan-

This basically subsumes 4 activities:1. Defining corporate mission2. Establishing SBU3. Assigning resources to each SBU4. Planning new business , downsizing older

ones.

Corporate and Division Strategic Planning

Defining the Corporate Mission:A good mission statement provides

employees with a shared sense of purpose, direction and opportunity.

Contents of marketing plan-Executive summary and table of contents-

presents a brief overview of the proposal-Current marketing situation-presents

relevant data on sales, costs, profits, market, competitors, distribution, and macro environment.

The value delivery sequence

The traditional physical process sequence assumes the company knows what to make and that the market will buy enough units to produce profits for the company. In the value delivery sequence there are 3 parts:

The Marketing Process

1.”Choose the value”-the marketing staff does segmentation, targeting and positioning of the market

2. “Provide the value”-after the STP process has chose the value, the product’s specifications and services should be detailed , the price and then the product should be manufactured and distributed.

3.”Communicate the value”-the customers are communicated about the value of the product through the sales force, promotion and advertisement.

The Marketing process consists of analyzing markets, researching and selecting markets, designing marketing strategies, planning marketing programs and organizing, implementing and controlling the marketing efforts.

The Marketing Process

1.Product or service alliance- one company licenses the other to produce is product, or two companies jointly market their complementary product or a new product.

2. Promotional alliance-one company agrees to carry the promotion for another company’s product or service.

3. Logistics alliance- one company offers logistic services to another company’s product.

4. Pricing collaboration- one more companies join in a special pricing collaboratin.

5. Program formulation- after developing the principal strategies, companies must work out detailed supporting programs for them.

6. Implementation- for the implementation of strategy, McKinsey has come up with a 7-S framework

-Style: employees should share a common way of thinking and behaving.

-Skills: these should be in consonance with the strategy.

-Staff: includes hiring able people, training them and then assigning them to the right jobs.

Shared values- employees should share the guiding values.

7. Feedback and control- A company’s internal strengths and weaknesses in various department need to be identified periodically.

Goal formulation- goals are developed to facilitate the management in planning, implementation and control of achieving the targets.

Strategic formulation- strategic is the roadmap for achieving the envisaged goals. Porter defined strategy as “creation of a unique and valuable position involving different set of activities”. Strategy can be formulated into 3 generic types:

Overall cost leadership- here a business aims at delivering its products at the lowest prices in the market and wins a large market share.

Differentation – here a business aims at achieving superior performance in an important customer area valued by a large chunk of the market. It could strive to be the service leader, the quality leader, the style leader or technology leader.

Focus – here a firm concentrates on one or more narrow market segments. It first identifies such a segment and then pursues either cost leadership or differentiation in them.

The strategic alliances could be in the form of marketing alliances in the following ways:

Integrative growth- by backward Integration, Forward Integration, or Horizontal integration.

Diversification growth- exploiting opportunities in new business.

Strategic Alliances

According to marketing approach, competitors are companies that satisfy the same customer need. The market concept of competition reveals a broader set of actual and potential competitors. By mapping the buyer’s steps in obtaining and using the product a company’s direct and indirect competitors can be identified.

Marketing Concept

• Strategies: What strategies a company uses to enter/survive in the market?

• Objectives: What are the objectives of the competitor’s and what drives its behavior? Factors shaping a competitor’s include size, history, current management, and financial situation.

• Strengths and Weaknesses : A company needs to gather information on each competitor’s strengths and weaknesses.

Analyzing Competitors

Three Important Variables for analyzing competitors

Share of market- The competitor’s share of the target market.

Share of mind- The percentage of costumers who named the competitor in responding to the statement, “Name the first company that comes to mind in this industry.”

Share of heart- The percentage of customers who named the competitor in responding to the statement, “Name the company from which you would prefer to buy the product.”

Companies that make steady gains in mind share and heart share will inevitably make gains in market share and profitability.

Competitive Strategies for Market Leaders

Expanding the Total Market New customers: Potential new users maybe

divided into three groups: Those who might use it but do not

(market-penetration strategy) Those who have never used it (new-

market segment strategy) Those who live elsewhere

(geographical-expansion strategy)

More usage: Two ways of increasing usage

Increasing the level or quantity of consumption: through packaging or product design or by increasing the availability of product.

Increasing the frequency of consumption: identifying completely new and different ways to use the brand and communicate the advantages of using the brand more frequently.

Defending Market Share

The most constructive response is continuous innovation. The leader leads the industry in developing new product and customer services, distribution effectiveness, and cost cutting. It keeps increasing its competitive strength and value to customers.

Position Defense: It involves occupying the most desirable market space in the minds of the consumers.

Flank Defense: The market leader should also erect outposts to protect a weak front or possibly serve as an invasion base for counterattack.

Preemptive Defense: A more aggressive maneuver is to attack before the enemy starts its offense. A company can lunch a preemptive defense in several ways.

Counteroffensive Defense: The leader can meet the attacker frontally or hit its flank or launch a pincer movement. An effective counterattack is to invade the attacker’s main territory so that it will have to pull back to defend the territory.

Mobile Defense: In mobile defense, the leader stretches its domain over new territories that can serve as future centers for defense and offense through market broadening and market diversification.

Contraction Defense: Giving up weaker territories and reassigning resources to stronger territories.

Expanding Market ShareA company should consider four factors

before pursuing increased market share: The possibility of provoking antitrust

action Economic cost Pursuing the wrong marketing-mix

strategy

The effect of increased market share on actual and perceived quality.

Competitive Strategies for Market ChallengersDefining the Strategic Objective and

Opponent(S)

A market challenger must decide whom to attack

It can attack the market leader. This is a high-risk but potentially high-payoff strategy

It can attack firms of its own size that are not doing the job and are underfinanced

It can attack small local and regional firms

Choosing a General Attack Strategy

Frontal Attack: The attacker matches its opponent’s product, advertising, price, and distribution

Flank Attack: Identifying shifts in market segments geographic areas that are causing gaps to develop, and then rushing in to fill the gaps and develop them into strong segments.

Encirclement Attack: The encirclement involves launching a grand offensive on several fronts. Make sense when the challenger commands superior resources

Bypass Attack: It means bypassing the enemy and attacking easier markets to broaden one’s resource base. Three lines of approach: diversifying into unrelated pro