Module 1: Strategic Planning & Marketing Strategy

Definition – Strategic Planning

• Strategic Planning is the management process of developing and maintaining a viable fit
between the organization's objectives, capabilities and resources, and its changing market
opportunities.

The Definition – Strategic Planning • Strategic Planning is the management process of developing
and maintaining a viable fit between the organization's objectives, capabilities and resources, and
its changing market opportunities.

Organizational Capabilities

• Marketing Capabilities • Financial Capabilities • Operations Capabilities • Human Resources

Capabilities • Physical Resources Capabilities • Top Management Capabilities • R & D
Capabilities

Organizational Capabilities

• Marketing Capabilities • Financial Capabilities • Operations Capabilities • Human Resources

Capabilities • Physical Resources Capabilities • Top Management Capabilities • R & D
Capabilities

Hierarchy of Strategic Planning

• Corporate Strategic Planning (Company level) • Business Strategic Planning (Business Unit level) •
Functional Strategic Planning (Functional level) • Regional Strategic Planning (Market level 1) • Zonal
Strategic Planning (Market level 2) • City/Town Strategic Planning ( Market level 3

Corporate Strategic Planning There are four distinct stages:

• Defining the corporate mission • Identifying the company’s Strategic Business Units (SBUs) •
Analyzing and evaluating the current portfolio of businesses • Identifying business growth
area

Strategic Directions

• Vision: Where the organization want to go? • Mission: Why the organization exists? • Values:
What the organization believes in and how it behaves? • Strategy: What the competitive “Game
Plan” be?

Corporate Mission

• Company develops mission statements in order to share them with their – Managers – employees
– channel partners – and business partners.

• The mission statement should focus on distinctive values – so that it acts as guidelines when
confronted with tough value trade-offs. – A good test of understanding of mission statement is to
ask managers: “What business would you say no to?”

1. Define the competitive domain • Industry Scope • Market Segment Scope • Vertical Scope
• Geographical Scope • Technology Scope

2. Motivate employees 3. Express the mission to those outside the organization. 4. Stress
major policies of the company

Strategic Business Unit Identification

• Within an Industry, companies tend to operate several businesses. (E.g., Reliance

Communications, HUL)
• Business should be identified as Customer-satisfying process and not goods-producing process.
– (e.g. Indian Railways defined its business not as a transportation business but as a Rail Carriers;
Bollywood defined as a movies making business and not entertainment business and thus were not
ready for competition from TV, Internet & other media)

• Definition of business can be Market-based or Product?based, provided – It can operate as an

independent unit from rest of the company – Has its own strategic planning & business team – Has
its own competitors – Profit Centre (E.g. Mobile Voice, Internet/ Broadband, DTH)

Business Unit Strategic Planning

(1) Business Mission: Each SBU within a company needs to define its own mission within the
broader corporate mission. This should cover: • Target Customer Group & needs • Industry Scope •
Technology Scope • Vertical Scope • Geographical Scope

(2) SWOT analysis: Internal factors analysis (Strengths & Weaknesses) External factors
analysis (Opportunities & Threats)

(3) Or, TOWS Analysis -q1 - Internal Strengths External Opportunities - Maxi-Maxi

Strategy" Strategies that use strengths to maximize opportunities.

q2 - Internal StrengthsExternal Threats - "Maxi-Mini

Strategy" Strategies that use strengths to minimize threats.

q3 - Internal Weaknesses External Opportunities - "Mini-Maxi Strategy"

Strategies that minimize weaknesses by taking advantage of opportunities.

q4 - Internal Weaknesses External Threats - "Mini-Mini Strategy"

Strategies that minimize weaknesses and avoid threats.

(4) Strategy Formulation

Marketing Management Process

Market Opportunity Analysis - Market Research, Segmentation, Target Market Selection,

Segment Profile - Designing Marketing Strategies (Differentiation & Positioning) - Marketing
Programs (4Ps) Marketing Implementation - Marketing Measurements & Control

Four Stages of Marketing Strategy

• Where are we now? (Strategic Analysis) • What do we want to be? (Strategic Direction &
Formulation) • How will we get there? (Strategic Choice) • How can we get there?
(Strategy implementation, Measurements & Control)

Outline of Marketing Plan

• Summary • Market Opportunity Analysis • Company Analysis • Market Research • Assumptions

• SWOT Analysis / TOWS Analysis • Objectives • Strategic Choice / Strategic Approach • Marketing
Strategy • Marketing Mix Objectives & Strategies • Implementation (Marketing Programs) •
Measurement & Control (Dashboard) • Financial Projections & Budget
1. Company Orientation

Module 2: Market & Environment Analysis (Market Opportunity Analysis)

Business Environment

• External Environment – Macro-Environment – Micro-Environment • Internal Environment

Internal Environment

Important internal factors are

1) Value System - The value system of founders and those at the helm of affairs has important
bearing on the choice of business, the mission and objectives of the organization, business policies
and practices.

2) Mission and Objectives - The business domain of the company , priorities , direction of
development, business philosophy, business policy etc. are guided by the mission and objectives of
the company

3) Management Structure and Nature - The organizational structure, the composition of the Board
of Directors, extent of professionalization of management etc. are important factors influencing
business decisions.

4) Internal Power Relationship - Factors like the amount of support the top management enjoys
from lower levels and workers, share holders and Board of Directors have important influence on
the
decisions and their implementation. The relationship between the members of Board of Directors is
also a critical factor.

5) Human Resources - The characteristics of the human resources like skill, quality, morale,
commitment, attitudes etc. could contribute to the strength and weakness of the organization. The
involvement, initiative etc. of the people at different levels may vary from organization to
organization.
6) Company Image and Brand Equity - The image of the company matters while raising finance,
forming joint ventures or other alliances, soliciting market intermediaries, entering purchase or sale
contracts , launching new products etc.

External Environment

Two Types

a) Micro Environment Consists of actors in the company’s immediate environment, that affects
the performance of the company.

Also known as task environment and operating environment • Include 1. The suppliers 2. Marketing
intermediaries 3. Competitors 4. Customers 5. Publics • More intimately linked with the company
than macro factors • The micro forces need not necessarily affect all the firms in a particular industry
in the same way. • Some of the micro factors are particular to a firm

b) Macro Environment Consists of larger societal forces that affect all the actors in company’s
micro environment

Macro-environment: PESTLE analysis

Michael Porter’s Five Forces Model

* Threat of Entry- large capital requirements or the need to gain economies of scale quickly. …
strong customer loyalty or strong brand preferences. … lack of adequate distribution channels or
access to raw materials

* Bargaining Power of Suppliers – … high when * A small number of dominant, highly

concentrated suppliers exists. * Few good substitute raw materials or suppliers are available. * The
cost of
switching raw materials or suppliers is high.

* Bargaining Power of Buyers – … high when * A small number of dominant, highly

concentrated suppliers exists. * Few good substitute raw materials or suppliers are available. *
The cost of switching raw materials or suppliers is high.

* Development of Substitute Products or Services – … high when * A small number of dominant,

highly concentrated suppliers exists. * Few good substitute raw materials or suppliers are available. *
The cost of switching raw materials or suppliers is high.

* Rivalry among Competitors – … intensity increases as * The number of competitors increases or

they become equal in size. * Demand for the industry’s products declines or industry growth slows. *
Fixed costs or barriers to leaving the industry are high.

3Cs Analysis - • Customers • Competitors • Company

4Cs Analysis - • Customers • Competitors • Company • Collaborators (Channels, Business Partners,

etc)

5Cs Analysis - • Customers • Competitors • Company • Colaborators • Climate (Context)

SWOT Analysis

External Factors • Macro Variables – Demographic – Economic – Political – Legal/Regulatory –

Social/Cultural • Micro Variables – Customer needs & preferences/ trends – Competitors –
Distribution channels – Suppliers

Internal Factors • Marketing strengths – Company well-known – Strong Market share – Product
Quality – Service Quality – Distribution network – Low cost of distribution – Low cost of
manufacturing – Low raw material cost – Sales Force • Financial strengths – Low cost of capital –
High profitability – Financial stability – High Investment funds • Manufacturing strengths – Modern
machinery – Economies of scale – Plant Capacity – Technical & Manufacturing skills •
Organisational strengths – Dedicated work force – Organisational culture – Capable Managers –
Leadership team – Speed of response – Flexibility & adaptability

Competitive Advantage Framework

• Environmental Factors – Rate of Technological Changes, Intensity of Competition • Organisational

Factors – Size, Structure, Manufacturing Capability, Organisational Processes, Financial Resources •
Market Factors – Customer Service, Product Quality, Brand Equity • Managerial Factors –
Leadership style, Leaders, Communication, etc. • Strategic Factors – Long-term objectives, Strategic
time
horizon, Product-market strategy,

Strategic Resources

Physical assets - rarely Financial assets – in some industries Human assets - possibly Intellectual
assets - frequently Reputational assets - often Relational assets - frequently Capabilities &
competencies – always
Porter’s Generic Value Chain

Research Types

• Exploratory Research • Conclusive Research – Descriptive Research – Experimental Research

• Qualitative Methods (Questionnaire Survey – Open ended questions, Focus Group, Depth
Interview, Online/ Offline Communities, Case Studies, Observational study, Ethnography, Delphi’s
method) • Quantitative Methods (Census, Questionnaire Survey – Closed ended questions,
Experimentations control groups, Test Marketing)
Strategic Options

• Invest – Increase market share sacrificing short term profits • Hold – Maintain Current market
Share • Harvest – Increase short term Profits • Divest – Reduce investments/ costs to increase
short term profits or liquidate

Outline of Strategic Marketing Planning

• Summary • Market (Opportunity) Analysis or Situational Analysis – Macro?Environment,

Industry, Micro-Environment (Market) Analysis • Company Analysis – Performance analysis,
Sustainable Competitive advantage, Strategic Resources & Capabilities, Internal Environment
analysis, Company Orientation • Market Research • Assumptions • SWOT / TOWS Analysis •
Objectives – Business Objectives, Marketing Objectives • Strategic Choice / Strategic Approach •
Marketing Strategy
(Alternative Scenarios) - STDP • Marketing Mix Objectives & Strategies – 4Ps(Goods)/8Ps (Services)
• Implementation - Marketing Programs & activities • Measurement & Control (Metrics Dashboard)
• Financial Projections & Budgeting

Strategic Choice / Strategic Approach

• Product Portfolio Strategic Approach • Porter’s Generic Competitive Strategic Approach •

Market Competitive Position Strategic Approach • Relationship Marketing Strategic Approach
Evaluating Factors

Market Attractiveness

• Overall Market Size • Annual Market Growth Rate • Historical Profit Margins • Life Cycle Stage
• Competitive Intensity • Technological Requirements • Environmental Impact:
Social/Cultural/Political/Legal

Company Strengths

• Market Share • Share Growth • Product Quality • Brand Reputation • Distribution Network •
Promotional Effectiveness • Production Capacity • Production efficiency • Unit Costs •
Material supplies • R&D performance • Managerial Personnel

(c) New Business Plan Strategy Growth Strategy

• Intensive Growth (Ansoff’s Matrix) – Market Penetration – Product Development –

Market Development

• Diversification Growth

– Concentric Diversification ; This method introduces closely related products to the existing
market. That is, similar products are added to the current product line. For example, an automobile
company adds a solar-powered car to its eco-friendly auto line.

– Horizontal diversification ; Diversifying a product horizontally means introducing new but

unrelated offerings to the company’s product mix. a clothing company launching its footwear line.

– Conglomerate Diversification ; A business focuses on a completely different product line in this

strategy. Hence, this can be extremely risky. The company broadens its scope and targets a
different market.

• Integrative Growth

– Forward Integration ; it is a case of down-stream integration extends to those businesses that

sell eventually to the consumer

– Backward Integration ; a strategy for growth in which a company seeks ownership of, or
some measure of control over, its suppliers.

– Horizontal Integration ; When two or more firms dealing in similar lines of activity
combine together then horizontal integration takes place.

Strategy Formulations - Relationship Marketing Strategic Approach

Few Statistics.....• It Costs six times more to sell to a new customer • Dissatisfied customer will tell 8-
10 potential customers • Firm can boost profits 85% by retaining 5% of your customers • Odds of
selling to a NEW customer = 15% (OLD = 50%) • 70% of unhappy customers will come back if handled
right! • More than 90% of today’s firms do NOT have the necessary sales and service integration to
support e-commerce
Relationship Marketing to Customer Relationship Management

• The concept of relationship marketing was first coined by Leonard Berry in 1983. He considered
it to consist of attracting, maintaining and enhancing customer relationships with organizations. •
In the years that followed, companies were engaging more and more in a meaningful dialogue
with individual customers. • In doing so, new organizational forms as well as technologies were
used, eventually resulting in what we know as Customer Relationship Management (CRM). • The
main
difference between RM and CRM is that the first does not acknowledge the use of technology, where
the latter uses Information Technology (IT) in implementing RM strategies

The essence of CRM

1. Customers have many points of contact with an organization

2. Some customers are more profitable than others • The “80/20” rule • For most firms, 80
percent of profit comes from 20 percent of customers • Companies realize that they can increase
profits by acknowledging that different groups of customers vary widely in their behavior, desires,
and
responsiveness to marketing.

3. Retaining customers is far most cost effective than recruiting new ones (5 to 6 times)

4. Use of Technology as enabler

5. The overall goal of CRM is effectively managing differentiated relationships with all customers
and communicating with them on an individual basis

Potential Benefits Of CRM

• Customer Acquisition ( Through Referrals) • Customer retention • Share of customer wallet •

Cross- selling • Up-selling • Continuity • A contact point • Personalization • Better Deals

Potential Costs Of CRM

• IT infrastructure • Process change

CRM Definition

process that addresses all aspects of identifying customers, creating customer knowledge, building
customer relationships, and shaping their perceptions of the organisation and its products’

Advantages of CRM Organizations

• Service provided in a better way, and a quicker way • Sales force automated • Integrated
customer information • Certain processes eliminated • Operation cost cut, and time efficient •
Brand names more quickly established • A central database so that everyone in your company can
keep track of
customer contacts • Lets you set up rules for distributing and managing work throughout your
company

Disadvantages of CRM Organizations

• Organizational wise change of priority to customers. • Significant investment of time and money
• Threatens management’s control/ power struggle • Heightens people’s resistance to change •
Inappropriate integration leads to disaster

Customer Relationship Life Cycle Phases

• Attention (Maximum Reach) • Acquisition (Customer Value ) • Retention (Customer Satisfaction)
& Winback • Extension (Enhancement) • Saturation (Engagement) • Separation & Winback

Five Phases of Relationship Marketing

• Reaching for Potential Relationships – Identification of potential customers through customer

profiling and customer mapping • Acquiring New Relationships – You acquire new customers by
promoting your company’s product and service leadership. • Retaining Customer Relationships
–
Retention focuses on service adaptability – delivering not what the market wants but what
customers want • Enhancing Existing Relationships – You enhance the relationship by encouraging
excellence in cross?selling and up-selling, thereby deepening and broadening the relationship. •
Bonding in Relationships – You develop bonding in the relationship through Rewards, Status
enhancement by developing Loyalty Programs, other engagements

Relationship Life Cycle

• In the exploration phase it is important to explore consumer wishes and expectations and to
communicate the possibilities and the way of operating of the organisation. Both parties
should explore where and how they are attracted to each other. • In the growth phase the
relationship
enters a critical phase. Especially by delivering service (and exceeding expectations) a company can
overcome this moment. But also with communication and cross selling efforts a company can
improve the chances to continue the relationship. • In the maturity phase it is the challenge to keep
the relationship alive. It should not become a routine. • In the decline phase a distinction should be
made between customers that one can and wants to retain and the others. Customers that are worth
the effort to be retained have to be identified. You want to learn their reasons why they might
consider stopping the relationship, so you can do something to avoid it.

Cross-selling & Up-Selling

• Customer buys more than one of the same product during a contact (two life insurance policies)
• Customer buys two or more different products during a contact (home contents and liability
insurance policies) • Customer buys a second or third product at a later time

Customer Lifetime Value (CLV)

• Customer Lifetime • Acquisition Cost • Customer Servicing Cost • Profits Over Lifetime Period
• Repeat Purchase • Break-Even Point & Payback Period • NPV • ROI%