Chapter Three: Winning The Market Though Market Oriented Strategic Planning

Chapter Three
Winning the Market Though Market Oriented

Strategic Planning
Corporate and Business Strategies
 Some corporations give their business units freedom to set
their own sales and profit goals and strategies.
 Others set goals for their business units but let them
develop their own strategies.
 Still others set the goals and participate in developing
individual business unit strategies.
 All corporate headquarters undertake four planning
activities:
1. Defining the corporate mission
2. Establishing strategic business units
3. Assigning resources to each strategic business unit
4. Assessing growth opportunities
3.3 Establishing Strategic Business Units
 Large companies normally manage quite different

businesses, each requiring its own strategy.
 An SBU has three characteristics:
• (1) It is a single business or collection of related businesses
that can be planned separately from the rest of the company;
• (2) it has its own set of competitors; and
• (3) it has a manager responsible for strategic planning and
profit performance who controls most of the factors
affecting profit.
• Eg., Midroc Ethiopia SBUs: Wanza furniture, Gold mining,
Midroc construction, Elfora agro industry, Star soap,
rainbow, Moha etc.
1-3
3.3.1 The Boston Consulting Group BCG Approach
• How can companies know the position of their

strategic plan?
• The purpose of identifying the company’s strategic
business units is to develop separate strategies and
assign appropriate funding to the entire business
portfolio. Once it has defined SBUs, management must
decide how to allocate corporate resources to each.
• Boston consulting group model (BCG) provides ways to
make investment decision.
1-4
Cont’d
 There are different types of model that can be used to analysis various
SBUs.
 BCG is a management consulting firm and it proposes a useful model to
strategic marketing planning.
 The (BCG), a leading management consulting firm, developed and

popularized the growth-share matrix.
 It enables companies to evaluate the weakness, strength and position of

the business based on relative market share and market growth rate.
 The location of each business unit indicates its

market growth rate and relative market share.
1-5
Cont’d
 The market growth rate on the vertical axis indicates the
annual growth rate of the market in which the business
operates.
 Relative market share, which is measured on the

horizontal axis, refers to the SBU’s market share relative
to that of its largest competitor in the segment.
 It serves as a measure of the company’s strength in the

relevant market segment.
1-6
Cont’d
 The growth-share matrix is divided into four cells, each
indicating a different type of business:
1. Question marks
2. Stars
3. Cash cows
4. Dogs
1-7
1. Question marks
 Are businesses that operate in high-growth markets but
have low relative market shares. Most businesses start
of as question marks as the company tries to enter a
high-growth market in which there is already a market
leader.
 It requires a lot of cash because the company is
spending money on plant, equipment, and personnel.
 The term question mark is appropriate because the
company has to think hard about whether to keep pouring
money into this business.
1-8
2. Stars
 Stars are market leaders in a high-growth market an
high share business.
 often require heavy investment to finance their rapid
growth and fight off competition.
3. Cashcow
 are low growth, high share business
 are former stars with the largest relative market share in
a slow-growth market.
 A cash cow produces a lot of cash for the company (due
to economies of scale and higher profit margins).
 Need less investment to hold their market share. 1-9
4. Dogs
 Dogs are businesses with weak market shares in low-
growth markets; typically, these generate low profits or
even losses.
 After plotting its various businesses in the growth-share
matrix, a company must determine whether the portfolio
is healthy.
 An unbalanced portfolio would have too many dogs or
question marks or too few stars and cash cows.
1-10
Cont’d
1-11
Cont’d
• to determine what objective, strategy, and
budget to assign to each SBU, four strategies
can be pursued:
1. Build strategy
2. Hold
3. Harvest
4. Divesting
1-12
Cont’d
 Build: the objective here is to increase market share,
i.e invest more in the business to build market share.
 it is appropriate for question marks whose market

shares must grow if they are to become stars.
 Hold: the objective is to maintain market share an
appropriate strategy for strong cash cows if they are
to continue yielding a large positive cash flow.
1-13
Cont’d
• Harvest: The objective is to increase short-term cash
flow regardless of long-term effect. Harvesting
involves a decision to withdraw from a business by
implementing a program of continuous reduction of
expenditure.
• The hope is to reduce costs faster than any potential
drop in sales, thus boosting cash flow. This strategy is
appropriate for weak cash cows
• Harvesting can also be used with question marks and
dogs.
1-14
Cont’d
• Divest: The objective is to sell or liquidate the
business because the resources can be better
used elsewhere.
• This is appropriate for dogs and question marks
that are dragging down company profits.
1-15
The meaning of marketing plan
• Marketing plan is a strategic document developed through

analysis and research and is aimed at achieving marketing
objectives.
• It represents a sub-set of organization’s overall plan which
supports the general business strategy.
• It is a blueprint for marketing strategy formulation and

implementation.
• It is a guiding, dynamic document that links the firm’s business
strategy (business model) with technology driven marketing
strategies.
•
08/21/2020 16
Cont’d…
• What are the purpose of marketing
plan ?
08/21/2020 17
Purposes of Marketing plan
• The marketing plan serves as a road map to:
(1) Guide the direction of the firms
(2) Allocate resources and
(3) Make tough decisions at critical stage.
08/21/2020 18
Levels of a Marketing Plan
•Strategic •Tactical
– Target marketing – Product features
decisions – Promotion
– Value proposition – Merchandising
– Analysis of marketing – Pricing
opportunities – Sales channels
– Service
08/21/2020 19
Cont’d…
• How do you develop marketing plan?
08/21/2020 20
Developing Marketing plan
• In order to produce a viable Marketing solution,
Marketers must first understand the current situation
of the company and its environment, profile, segment
the target in to the right market and then strategically
position the products as to achieve optimal response
with the target market.
• This is generally achieved through SWOT analysis.
• By assessing organization’s strengths and weaknesses
and looking at current opportunities and threats one
can devise a Marketing strategy that can improve the
organization’s bottom line.
08/21/2020 21
3.1.1. Contents of the Marketing Plan
1. Executive summary and table of contents

2. Situation analysis
3. Marketing strategy
4. Financial projections
5. Implementation and controls
1. Executive summary and table of contents
• Presents a quick overview of the plan for quick
management review.
• This brief summary outlines the plan’s main goals and
recommendations.
• it is followed by a table of contents. 1-22
Cont’d
• 2. Situational analysis:
 Performing SWOT Analysis
• The marketing audit that presents background data on
sales, costs, profits, the market, competitors,
distribution, and the macro environment of the
organization.
• This section identifies the major opportunities and
threats, strengths and weaknesses.
3. Marketing strategy
• The manager outlines the broad marketing strategy or
‘game plan’ for attaining the objectives.
1-23
Cont’d
• Marketing strategy is the marketing logic by which
the business unit hopes to achieve its marketing objectives.
• It shows how strategies for target markets and positioning
build upon the firm’s differential advantages.
• It should detail the market segments on which the
company will focus.
• These segments differ in their needs and wants, responses
to marketing, and profitability.
 It also presents the relative market share and market
growth.
1-24
Cont’d
• 4. Financial Projections:
 It include: a sales forecast, an expense forecast, and
a break-even analysis.
• On the revenue side, the projections show the
forecasted sales volume by month and product
category.
• On the expense side, the projections show the expected
costs of marketing.
1-25
Cont’d
• The break-even analysis shows how many units must
be sold monthly to offset the monthly fixed costs and
average per-unit variable costs.
6. Implementation
• Marketing implementation—The process that turns
marketing strategies and plans into marketing actions in
order to accomplish strategic marketing objectives.
• It involves day-to-day, month-to-month activities that
effectively put the marketing plan to work.
1-26
Evaluating a Marketing Plan
 Is the plan simple?

 Is the plan specific?
 Is the plan realistic?
 Is the plan complete?
Measuring Marketing Plan Performance
•Marketers can use four tools to check the

performance of their plan;
1. Sales Analysis (Sales Variance Analysis & Micro-Sales
Analysis).
2. Market Share Analysis ( Relative Market Share,

Served Market Share and Overall Market Share
3. Marketing –Expense –To-Sales

Analysis,
4. Financial Analysis.
5. Profitability Analysis
08/21/2020 28
Group Assignment (30%)
 Form the usual group and develop

a Business/Marketing plan
 Tips
 It should be innovative/new
 Original/your own work
 Submit in hard copy before the
deadline of presentation.
08/21/2020 29

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Chapter Three

Winning the Market Though Market Oriented

 Large companies normally manage quite different

• How can companies know the position of their

 The (BCG), a leading management consulting firm, developed and

 It enables companies to evaluate the weakness, strength and position of

 The location of each business unit indicates its

 Relative market share, which is measured on the

 It serves as a measure of the company’s strength in the

 it is appropriate for question marks whose market

• Marketing plan is a strategic document developed through

• It is a blueprint for marketing strategy formulation and

• The marketing plan serves as a road map to:

(1) Guide the direction of the firms

(2) Allocate resources and

(3) Make tough decisions at critical stage.

1. Executive summary and table of contents

 Is the plan simple?

•Marketers can use four tools to check the

2. Market Share Analysis ( Relative Market Share,

3. Marketing –Expense –To-Sales

 Form the usual group and develop

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