Unit 2 discusses strategic planning and marketing's role within it. There are four steps to strategic planning at the corporate level: 1) defining the corporate mission, 2) establishing strategic business units, 3) assigning resources to SBUs, and 4) developing growth strategies. The role of marketing is to ensure strategies are customer-oriented. Strategic planning guides both broad corporate strategy and more targeted marketing strategies.

1. Unit 2.
STRATEGIC PLANNING AND THE
MARKETING PROCESS
Objectives
Participants will be able to:
1.explain company wide strategic planning and its
four steps
2.explain functional planning strategies assess
marketing role in strategic planning
1

2. The Role of Marketing in
Strategic Planning
2

3. Strategic Planning
Strategic planning is the process of
developing and maintaining a feasible fit
between the organization’s objectives,
skills, and resources and its changing
marketing opportunities
(Kotler et.al(2012 pg38)
3

4. Strategic Planning
According to Kotler et.al (2012)
Company-wide strategic planning
guides marketing strategy and planning.
Like marketing strategy, the company’s
broad strategy must also be customer
oriented
4

5. Reasons for Planning
Kotler posit the following :
•if one does not know where we are
going any road will take us there.
•The essence of strategic planning is the
contemplation of current decision choices
in the light of their probable outcome in
the future
•The future is unpredictable however it is
not a arbitrary stroll.
5

6. Four Organizational Levels
of Strategic Planning
Corporate SBU Unit Functional
Source: Marketing for Hospitality and Tourism, 3e ©2003 Pearson Education, Inc.
Philip Kotler, John Bowen, James Makens Upper Saddle River, NJ 07458
6

7. Four Steps in Corporate Strategic
Planning Process
1. Defining the corporate mission.
2. Establishing strategic business units
(SBU).
3. Assigning resources to each SBU.
4. Developing growth strategies
(Kotler et.al pg 38-
7

8. Corporate Strategic Planning (cont.)
Defining the corporate mission
1. Mission
• The organization’s mission should define the
competitive scopes within which the company will
operate. Industry scope, products and applications
scope, competencies scope, market-segment scope,
and vertical scope.
• should be market oriented and defined in terms of
satisfying basic customer needs.
• Products and technologies eventually become
outdated, but basic market needs may last forever.
8

9. Corporate Strategic Planning (cont.)
Defining the corporate mission
1. Mission
Questions to ask in establishing Mission!
• What is our current business?
• Who is the customer?
• What do consumers value?
• What do we do best?
• What should our business be?
• What are the values/ethics of the company?
9

10. Corporate Strategic Planning (cont.)
Defining the corporate mission
2. Establishing Strategic Business Units
Business portfolio:The collection of businesses and
products that make up the company.( Kotler 2012 pg 40)
• Define Strategic Business Units by need rather
than product.
food vs patty
Convenience food fried chicken etc
Defining business by product lead to
• Defined in terms of satisfying basic customer needs
to Marketing myopia – communication vs blackberry
phone.
10

11. Corporate Strategic Planning (cont.)
Defining the corporate mission
2. Establishing Strategic Business Units
Kotler contends the following :
The best business portfolio is the one that best fits the
company’s strengths and weaknesses to opportunities in
the environment.
Business portfolio planning involves two steps.
 First, the company must analyze its current business portfolio
and determine which businesses should receive more, less,
or no investment.
Portfolio analysis
The process by which Management evaluates the
products and businesses that make up the company.
(Kotler et.al 2012 pg 42) 11

12. Corporate Strategic Planning (cont.)
Defining the corporate mission
2. Establishing Strategic Business Units
Kotler contends the following :
 Second, it must shape the future portfolio by developing
strategies for growth and downsizing.
The purpose of strategic planning is to find ways in
which the company can best use its strengths to take
advantage of attractive opportunities in the environment.
12

13. Corporate Strategic Planning (cont.)
Defining the corporate mission
3. Assigning Resources to Each SBU
• The best-known portfolio-planning /analytical tools is the
Boston Consulting Group growth-share matrix are used to
guide management in evaluating each SBU.
Growth-share matrix
A portfolio-planning method that evaluates
a company’s SBUs in terms of its market
growth rate and relative market share.
(Kotler…..)
• Anticipate changes
13

14. Analyzing Current SBU’s:
Boston Consulting Group Approach
Stars Question Marks
Question Marks
Market Growth Rate
High
• High growth & share •• High growth, low share
High growth, low share
• Profit potential ••Build into Stars or phase out
Build into Stars or phase out
• May need heavy ••Require cash to hold
Require cash to hold
investment to grow market share
market share
Cash Cows
Cash Cows Dogs
Dogs
•• Low growth, high share •• Low growth & share
Low growth & share
Low growth, high share ••Low profit potential
••Established, successful Low profit potential
Low
Established, successful
SBU’s
SBU’s
•Produce cash
•Produce cash
High Low
Relative Market Share 14

15. Limitations of the Boston
Consulting Group Approach
Porter contend that the BCG matrix exhibits the
following weaknesses:
1.Market growth rate is only one factor in industry
attractiveness:-
 relative market share is only one factor in competitive
advantage.
 The growth-share matrix overlooks many other factors in
these two important determinants of profitability.
2.The framework assumes that each SBU is
independent of the others.
 In some cases, a business unit that is a "dog" may be
helping other business units gain a competitive
advantage. 15

16. Limitations of the Boston
Consulting Group Approach
3. The matrix depends heavily upon the breadth
of the definition of the market.
 A business unit may dominate its small niche, but
have very low market share in the overall industry.
In such a case, the definition of the market can
make the difference between a dog and a cash
cow.
(adapted from: http://www.netmba.com/strategy/matrix/bcg/)
16

17. Corporate Strategic Planning
(cont.)
4. Developing Growth Strategies
– Intensive growth opportunities: Identify
further opportunities to achieve growth within the
company’s current business.
• Market penetration strategy seeks to
increase current products in current markets.
• Market development strategy looks for new
markets in which current products can
expand.
• Product development strategy considers
new product possibilities
17

18. Corporate Strategic Planning
(cont.)
- Diversification growth opportunities:
Identify opportunities to add attractive
businesses that are unrelated to the
company’s current businesses.
• Concentric diversification strategy:
Company seeks new products that have
technological and/or marketing synergy
with existing product lines, even though
the product may appeal to a new class
of customers
18

19. Corporate Strategic Planning
(cont.)
- Horizontal diversification strategy:
Company searches for new products
that could appeal to its current
customers though technologically
unrelated to its current product line.
• Conglomerate diversification
strategy.- Financial Institutions getting
into real estates or farming business
19

20. Corporate Strategic Planning
(cont.)
- Integrative growth opportunities.
• Backward integration: An Agro-Processing
company acquiring one of its supplier’ farms.
• Forward integration: Agro Processing
company acquiring a distribution chain.
conglomerate
• Horizontal integration: An Agro-Processing
company acquiring one or more competitors,
provided the government does not bar the
move. or Digicel acquiring Claro
20

21. Developing Growth Strategies
in the Age of Connectedness
Product/ Market Expansion Grid
Existing New
Products Products
Existing 1. Market 3. Product
Markets Penetration Development
New 2. Market
4. Diversification
Markets Development
Adapted from Kotler. pg44 21

22. Developing Growth Strategies
in the Age of Connectedness
Product/ Market Expansion Grid
Product/market expansion grid:-
A portfolio-planning tool for identifying
company growth opportunities through
market penetration, market development,
product development, or diversification
22

23. Business Strategy Planning –
Planning at the SBU Level
1. Business mission
2. External environment analysis–
opportunities and threats
3. Internal environment analysis– strengths
and weaknesses
4.Goal Formulation (What do we want?)–The
vision
23

24. Business Strategy Planning
(cont.)
5. Strategy Formulation (How do we get
there?)
- Michael Porter’s three generic types of strategy:
• Overall cost leadership
• Differentiation
• Focus
– Strategic Alliances: companies need to form strategic
alliances with domestic or multinational companies that
complement or leverage their capabilities and
resources to achieve leadership nationally or globally.
24

25. Business Strategy Planning
(cont.)
6. Program formulation. Corporations must
develop hiring, training, advertising, and other
programs to support their strategy.
7. Implementation. If A firm is going to be
successful , it must communicate its strategy
to its employees and it must have the
resources to carry out its strategy.
25

26. Business Strategy Planning
(cont.)
8. Feedback and control are
unquestionably essential to track
outcomes and monitor new
developments in the market
environment.
26

27. References and further
reading
1. Principles of Marketing. K
2. Kotler et.al, (2013), Marketing for Hospitality and Tourism,
Retrieved Jan, 2013 from:……
• Kotler, P. Bowen J, Makens,J 2003 Pearson Education, Inc
Retreaved from:
• NetMBA.com (2002-2010) The BCG Growth-Share Matrix
Retrieved January 09, 2012 from :
http://www.netmba.com/strategy/matrix/bcg/
• http://www.slideshare.net/taquilla/marketing-management-by-philip-kotler-719-slides
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