Marketing and the Concept of Planning & Strategy

Transcription

1 Marketing and the Concept of Planning & Strategy chapter 1 strategic marketing (PGDBM 339) BIM Bangalore ranganath iyengar

2 discussion context Marketing decision making Strategic planning Marketing decisions linkage Concept of planning Definition of planning Concept of strategy Concept of strategic planning Strategic Business units (SBUs) Summary

3 Marketing decision making Marketing concept approach Directs the marketer to - develop the product offering - develop the marketing program to meet the needs of the customer base e.g. - stand alone products (mobile phone) Systems approach Instructs the market to - view the product not as individual entity but as one aspect of customer s need satisfaction system e.g. - product / service bundles (mobile + service) Environmental approach Customer centric approach* Portrays the marketing decision maker as - the focal point of numerous environments within which the firm operates impacts marketing program success legal-political, economic, competitive, consumer, market structure, market structure, technical, international etc. e.g. - geographic customization (low price mobiles) Product / Service is evolved from an understanding of customer preferences + behavior - involvement of customer in product design / price & experience e.g. lifestyle products (high end mobiles, perfumes, watches)

4 Relationship between the Strategic Planning Process & approaches to marketing decision making Strategic Planning process Strategy Specifics Choice of an approach to marketing decision making: (a) Marketing concept approach (b) Systems approach (c) Environmental approach (d) Other

5 Evolution of Strategic marketing Provides a reference point (strategy) Strategy = choices given resource constraints 1960s discovery & exploitation of entrepreneurial opportunities 1970s - centralized control of resources and conservation of capital Focus areas maximization of ROI; establishment of product / market scope Evolution of Strategic Marketing from Strategic Planning

6 Concept of planning Henri Fayol, French industrialist first attempted formal planning Why plan? Better position or standing Helps progress in a sustainable manner Helps every manager think, decide and act more effectively in a desired direction Keeps organization flexible Stimulates a cooperative, integrated, enthusiastic approach to organization problems Provides lead and lag indicators Leads to socially and economically useful results

7 Defining planning What is planning? Planning is essentially a process directed toward making today s decisions with tomorrow in mind and a means of preparing for future decisions so that they may be made rapidly, economically, and with as little disruption to the business as possible. Definitions Budget / Financial plan Long range plan / Strategic plan Short range plan / Tactical plan Executive / Intermediate / Operational planning Planning vs. forecasting Forecasting assess future changes and impact Planning set objectives and goals and develop strategy

8 Measuring accountability & Performance across the organization Executive Planning Financial Planning, Business Planning, Sales/Marketing Planning, Resource Management Simulations Intermediate Planning Distribution Requirements Planning, Master Production Schedule, Rough-Cut Capacity Planning, Detailed Capacity Planning, Engineering Change Management, Material Requirements Planning Operations Planning Procurement, Inventory Management, Bills of Material Management, Work Order Management, Production Activity Control, Shop Floor Scheduling, Product Costing

9 Planning practices Requisites -Outlook (Functional / Professional views) -Who should participate -Joint and interactive collaboration -Incentive and rewards -Staff coordination -Role of CEO in planning Initiating planning process -Foundation -CEO is a central participant -Method -Yearly -Before any major decisions -Gradual evolution -Contingency and Risk Philosophies of planning -Ackoff - Satisfying - easily achievable goals Optimizing - modeling and iteration Adaptivizing innovation based on business dynamics Tools Ten Step Planning EFQM Hoshin Kanri Current Ten step planning, PDCA

10 Concept of strategy What is strategy? Strategy in a firm is the pattern of major objectives, purposes, or goals and essential policies and plans for achieving those goals, stated in such a way as to define what business the company is in or is to be in and the kind of company it is or is to be. When is strategy needed? When resources are finite When there is uncertainty about competitive strengths and behavior When commitment of resources is irreversible When decisions must be coordinated between far flung places and over time When there is uncertainty about control of the initiative

11 Concept of strategic planning Is our planning really strategic? Do we try to anticipate change or only project from the past? Do our plans leave room to explore strategic alternatives? Or do they confine us to conventional thinking? Do we have time and incentive to investigate truly important things? Or do we spend excessive planning time on trivia? Have we ever seriously evaluated a new approach to an old market? Or are we locked into the status quo? Do our plans critically document and examine strategic assumptions? Or do we not really understand the implications of the plans we review? Do we consistently make an attempt to examine consumer, competitor and distributor responses to our programs? Or do we assume the changes will not affect the relationships we have seen in the past? Source: Thomas P Justad and Ted J Mitchell

12 Strategic Planning perspectives Managing Growth & Change For Organization development Before spinning off a business Strategic Planning For increased market share Before diversification or divestment For gaining Competitive advantage

13 Product to Market map Segment 1 Segment 2 Segment 3 Segment 4 Revenue line 1a Revenue line 1b (Tier 1 business) Revenue line 2 (Tier 2 business) Revenue line 3a Revenue line 3b Revenue line 3c (Tier 3 business) Revenue line t (Tier 4 business) SIIPL Research and Consulting

14 New Strategy Map for XYZ business Earn+ Contribute+ Share Financials Earn+ Contribute+ Customers Spend+ Leverage Process Service Quality Direct sales+ Channels Product/ Service deployment Products Rev= Mgn= Online Box Products Retail Centers Service Products Product / Service Mgmt Product / Svc Conceptualization Services Rev= Mgn= Training Products Institutional Sales Efficiency Projects Rev= Mgn= Support Sales System Target Revenues, EBITDA PAT, EPS Marketing & Sales Account or Segment Profit Leadership & Credibility Product / Svc C V P IPR People Quality of Revenue Streams Customer Profitability + Quality Cost of operations Infrastructure Draft SIIPL-XYZ-confidential New Business Deal size + wallet share Technology Money Management Market Share Investment Market Expansion Sales quantum & Receivables Brand = Customer Promise Spend+ Leverage Product R&D Quality Learning & Growth Product Costing Product / Service Realization capacity People Skills Product features Technology + Tools Capacity Infrastructure, People, Technology, Skills, Partners, Reach Platform + Reach Selling & POS capacity Business Vision Channel Team Knowledge Management Practices Sales Team Corporate + Business Practices Infrastructure Customer promise Competitive Strategy

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16 Strategic Business units (SBUs) SBU Refers to a business unit comprising one or more products having a common market base whose manager has complete responsibility for integrating all functions into a strategy against an identifiable competitor. SBU concepts Have a unique business mission independent of other SBUs Have a clearly definable set of competitors Be able to carry out integrative planning relatively independent of other SBUs Be able to manage resources in other areas Be large enough to justify senior management attention but small enough to serve as a useful focus for resource allocation Examples of SBUs private sector, public sector

17 Summary Q&A Summary Discussion Marketing decision making Strategy Marketing linkage Concepts of Planning Planning frameworks Concepts of Strategy / Strategic planning Tools and frameworks Strategy map Concept of SBU Role of CEO Significance of planning Relevance of strategic planning Difference between planning and strategic planning SBU need / relevance Strategy Marketing linkage Planning philosophies satisfying, optimizing and adaptivizing