MBA (Evening Program), Department of Marketing,

Faculty of Business Studies, University of Dhaka.

Term Paper on Strategic Planning and the

Marketing Process

Submitted to: Prof. Syed Abul Kalam Azad, Ph.D, Department of

Marketing, FBS, University of Dhaka.

Submitted by: 1. Imon Kumar Dey (41428078)

2. Md. Anisur Rahman (41529069)
3. Md. Akramul Haque (41529002)
4. Md. Rajib (41427044)
5. Md. Israfil Hossain (41530058)

Submission Date: 25th June, 2015.

Strategic Planning:
Strategic planning is an organizational management activity that is used to set priorities, focus
energy and resources, strengthen operations, ensure that employees and other stakeholders are
working toward common goals, establish agreement around intended outcomes/results, and
assess and adjust the organization's direction in response to a changing environment. It is a
disciplined effort that produces fundamental decisions and actions that shape and guide what an
organization is, who it serves, what it does, and why it does it, with a focus on the future.
Effective strategic planning articulates not only where an organization is going and the actions
needed to make progress, but also how it will know if it is successful.
As a company grows and as the business environment becomes more complex the need for
strategic planning becomes greater. There is a need for all people in the corporation to
understand the direction and mission of the business. Companies consistently applying a
disciplined approach to strategic planning are better prepared to evolve as the market changes
and as different market segments require different needs for the products or services of the
company.
The benefit of the discipline that develops from the process of strategic planning, leads to
improved communication. It facilitates effective decision-making, better selection of tactical
options and leads to a higher probability of achieving the owners or stakeholders goals and
objectives.
Strategic planning can be a challenging process, particularly the first time it is undertaken in a
company. With patience and perseverance as well as a strong team effort the strategic plan can
be the beginning of improved and predictable results for a company. At times when the business
gets off track a strategic plan can help direct the recovery process. When strategic planning is
treated as an ongoing process it becomes a competitive advantage and an offensive assurance of
improved day to day execution of the business practices.
Use of an outside, independent facilitator can help in the process and in the development of a
strategic plan. An outside resource can provide objectivity and serve as a devils advocate as
well as a sounding board for the management charged with plan development. In the final
analysis the plan must have the authorship and ownership of the owner and the managers who
must execute and follow the strategic plan. It must be their plan.
The strategic plan, to be of real long-term value, must be treated as an ongoing business process.
It must be reflective of the owners mission and vision. It must evolve and change to reflect
changing market and economic conditions. It must be proactive to competitive, market and
economic conditions. If those steps are followed, the strategic plan will institutionalize a culture
of continuous improvement and disciplined change.

There is no one formula or process for strategic planning. There are however, principles and
required steps that optimize the value of strategic planning.

Steps In Corporate Strategic Planning:

According to American Marketing author, consultant and Professor Philip Kotler there are four
steps in corporate strategic planning process.
1.
2.
3.
4.

Defining the Company Mission

Setting Company Objectives and Goals
Designing the Business Portfolio
Developing Growth Strategies or Planning New Businesses

Defining the Companys Business and Mission:

Any institution whether it is a government organization, non-profit, or for-profitmobilizes a
body of people to achieve a specific set of goals. When formulated precisely into words, these
goals become a mission statement.

WHO the organization is (e.g., name, type of agency)

WHAT it does
For WHOM it does these things (possibly defined by a community or geographical area)
HOW the WHAT is accomplished

Beyond simply communicating purpose, mission statements also express the motivation behind
this purpose. The principles that motivate and guide an organizations actions ground its overall
message and as such are an important part of the mission statement.
The length of a mission statement often reflects how the organization hopes it will function.
Some organizations prefer to post a brief mission statement, of only one to two sentences in
length, so it can be more easily memorized and repeated. Other organizations use the mission
statement as an opportunity to articulate critical information about their purposes and goals to
investors and the general public; these statements may be a paragraph or a full page in length.
Often, a short tagline or motto is written with longer statements to summarize the mission in a
succinct and catchy way. Regardless of length, a mission statement should always work to
inspire action. It should send a message to existing or prospective supporters compelling them to
buy, donate, vote, etc.

Product-Oriented versus Market Oriented Definitions

of a Business:
A market orientated company is one that organizes its activities, products and services around
the wants and needs of its customers. By contrast, a product-orientated firm has its primary focus
on its product and on the skills, knowledge and systems that support that product.
Until the late 20th century many firms were product-orientated and failed to understand the
changing needs of their customers in an increasingly competitive marketplace. A major swing
towards market-orientation has led to intensified marker research and product ranges carefully
designed to fir customer preferences.
However, product orientation can still be important in keeping an emphasis on quality, safety and
investment in new technology.
Successful companies recognize the importance of both approaches. Products must start with the
needs and wants of customers. But delivery of a profitable product depends on efficiency and
quality in production.

In the real world, market and product orientation are closely intertwined so that companies like
Gillette, Coca-Cola and Travis Perkins, will:

carry out market research into what consumers want

organize product research in line with the results of market research
constantly engage in qualitative market research to find out what focus groups of
customers think of new ideas
test market new products in smaller market areas before launching them onto a wider
market
evaluate ongoing customer perception of goods and services, in order to make
improvements to technologies and product offerings.

Market orientation gets the right product; product orientation get the product right.

Setting Company Objectives and Goals:

Mission statements guide the development of objectives & goals

Turn mission statements into the detailed supporting objectives at each level in
theorg. hierarchy

This mission leads to a hierarchy of objectives

Each Manager should have objectives & be responsible for reaching them

Strategies are developed to accomplish these objectives

However, the objectives should be specific

Designing the Business Portfolio:

Business portfolio is the right mix of businesses that company operates and products that offers
to customers. Portfolio analysis is the process by which company analyze its products and
businesses.
Company develops their business portfolio in two steps:
a. Analyze the existing business portfolio and decide which business should receive more, less or
no investment.
b. Developing the new business portfolio for future to meet growth opportunities and eliminating
the unprofitable portfolios.

Strategic business unit:

The unit of the company that has separate mission and objectives and that can be planned
independently from other businesses.
Characteristics of SBU:
1. It may be brand, or a product line or separate division of the company.
2. It is having distinct mission and objectives.
3. It is managed by separate executive team.
BCG growth-share matrix:
Companies that are large enough to be organized into strategic business units face the challenge
of allocating resources among those units. In the early 1970's the Boston Consulting Group
developed a model for managing a portfolio of different business units (or major product lines).
The BCG growth-share matrixdisplays the various business units on a graph of the market
growth rate vs. market share relative to competitors:
This technique is particularly useful for multi-divisional or multiproduct companies. The
divisions or products compromise the organizations business portfolio. The composition of
the portfolio can be critical to the growth and success of the company. The BCG matrix
considers two variables, namely.
1. MARKET GROWTH RATE
2. RELATIVE MARKET SHARE
The market growth rate is shown on the vertical (y) axis and is expressed as a %. The range is set
somewhat arbitrarily. The overhead shows a range of 0 to 20% with division between low
And high growth at 10% (the original work by B Headley Strategy and the business portfolio,
Long Range Planning, Feb 1977 used these criteria). Inflation and/or Gross National Product
have some impact on the range and thus the vertical axis can be modified to represent an index
where the dividing line between low and high growth is at 1.0. Industries expanding faster than
inflation or GNP would show above the line and those growing at less than inflation or GNP
would be classed as low growth and show below the line. The horizontal (x) axis shows relative
market share. The share is calculated by reference to the largest competitor in the market. Again
the range and division between high and low shares is arbitrary. The original work used a scale
of 0.1, i.e. market leadership occurs when the relative market share exceeds 1.0. The BCG
growth/share matrix is divided into four cells or quadrants, each of which represents a particular
type of business. Divisions or products are represented by circles. The size of the circle reflects
the relative significance of the division/product to group sales. A development of the matrix is to
reflect the relative profit contribution of each division and this is shown as a pie-segment within
the circle.

Question Marks:
Question marks are products that grow rapidly and as a result consume large amounts of cash,
but because they have low market shares they dont generate much cash. The result is a large net
cash consumption. A question mark has the potential to gain market share and become a star, and
eventually a cash cow when the market growth slows. If it doesnt become a market leader it will
become a dog when market growth declines. Question marks need to be analyzed carefully to
determine if they are worth the investment required to grow market share.
Stars:
Stars generate large sums of cash because of their strong relative market share, but also consume
large amounts of cash because of their high growth rate. So the cash being spent and brought in
approximately nets out. If a star can maintain its large market share it will become a cash cow
when the market growth rate declines.

Cash Cows:
As leaders in a mature market, cash cows exhibit a return on assets that is greater than the market
growth rate so they generate more cash than they consume. These units should be
milkedextracting the profits and investing as little as possible. They provide the cash required
to turn question marks into market leaders.

Dogs:
Dogs have a low market share and a low growth rate and neither generates nor consumes a large
amount of cash. However, dogs are cash traps because of the money tied up in a business that has
little potential. Such businesses are candidates for divestiture.
Successful products may well move from question mark though star to Cash Cow and finally to
Dog. Less successful products that never gain market position will move straight from question
mark to Dog.
Companies will frequently search for a balanced portfolio, since.
Too many stars may lead to a cash crisis
Too many Cash Cows puts future profitability at risk
And too many question marks may affect current profitability.
The BCG matrix provides a framework for allocating resources among different business units
and allows one to compare many business units at a glance. However, the approach has received
some negative criticism for the following reasons:

The link between market share and profitability is questionable since increasing market
share can be very expensive.
The approach may overemphasize high growth, since it ignores the potential of declining
markets.
The model considers market growth rate to be a given. In practice the firm may be able to
grow the market.

These issues are addressed by the GE / McKinsey Matrix, which considers market growth rate to
be only one of many factors that make an industry attractive, and which considers relative market
share to be only one of many factors describing the competitive strength of the business unit.

Developing Growth Strategies or Planning New

Businesses:
Turning a small business into a big one is never busy. In other words, most businesses start
small and stay there. But there are examples of companies out there that have successfully
made the transition from start-up to small business to fully-thriving large business. This step
involves planning new businesses and expanding existing businesses.
Strategic Planning Gap:
The evaluation of the difference between a desired outcome and an actual outcome. This
difference is called a gap. Strategic gap analysis attempts to determine what a company should

do differently to achieve a particular goal by looking at the time frame, management, budget and
other factors to determine where shortcomings lie. After conducting this analysis, the company
should develop an implementation plan to eliminate the gaps.

Example:
For example, if a small restaurant wanted to become a top tourist destination but currently only
served locals, a strategic gap analysis would look at the changes required for the restaurant to
meet its goals. These changes might include relocating to an area with more tourists, altering the
menu to appeal to out-of-town visitors, hiring more staff so the restaurant's hours become more
convenient for travelers, and so on. The analysis would also determine how to make these
changes happen. If a business doesn't know where it stands in relation to its goals, it is not likely
to achieve them.

There are several ways to bridge the gap:

intensive growth (identifying further growth opportunities within existing businesses);

integrative growth (building or acquiring businesses that are related to current
businesses);
diversification growth (adding businesses that are unrelated to existing businesses).

Intensive Growth Strategies:

For intensive growth opportunities, businesses should review four types of growth:

Market Penetration - the firm seeks to achieve growth with existing products in their current
market segments, aiming to increase its market share.
Market Development - the firm seeks growth by targeting its existing products to new market
segments.
Product Development - the firms develops new products targeted to its existing market
segments.
Diversification - the firm grows by diversifying into new businesses by developing new
products for new markets.

Selecting a Product-Market Growth Strategy:

The market penetration strategy is the least risky since it leverages many of the firm's existing
resources and capabilities. In a growing market, simply maintaining market share will result in
growth, and there may exist opportunities to increase market share if competitors reach capacity
limits. However, market penetration has limits, and once the market approaches saturation
another strategy must be pursued if the firm is to continue to grow.
Market development options include the pursuit of additional market segments or geographical
regions. The development of new markets for the product may be a good strategy if the firm's
core competencies are related more to the specific product than to its experience with a specific
market segment. Because the firm is expanding into a new market, a market development
strategy typically has more risk than a market penetration strategy.
A product development strategy may be appropriate if the firm's strengths are related to its
specific customers rather than to the specific product itself. In this situation, it can leverage its
strengths by developing a new product targeted to its existing customers. Similar to the case of
new market development, new product development carries more risk than simply attempting to
increase market share.
Diversification is the most risky of the four growth strategies since it requires both product and
market development and may be outside the core competencies of the firm. In fact, this quadrant

of the matrix has been referred to by some as the "suicide cell". However, diversification may be
a reasonable choice if the high risk is compensated by the chance of a 7 high rate of return. Other
advantages of diversification include the potential to gain a foothold in an attractive industry and
the reduction of overall business portfolio risk.
Integrative Growth Strategies:
Integrative growth A growth strategy in which a company increases its sales and profits through
backward, forward, or horizontal integration within its industry. A company may acquire one or
more of its suppliers to gain more control or generate more profits (backward integration). It
might acquire some wholesalers or retailers, especially if they are highly profitable (forward
integration). Or finally, it might acquire one or more competitors through acquisition (horizontal
integration).
Backward Integration: A company engaged in production of a product may integrate,
backward upto the sources of raw materials. This would ensure continuous supply of raw
materials for the production processes of the company. The acquisition of a textile mill by a
ready-made garments manufacturer is a case of backward integration.
Forward Integration: A company may decide to grow through forward integration with the
distribution channels of its products. It may acquire certain distribution channels to have a
greater control over the distribution of its products. The manufacturer of readymade garments
may take over certain retail shops to ensure ready market for his products.
Horizontal Integration: It takes place by merging of units engaged in manufacturing similar
products or rendering similar services. That means competing firms are brought together under
single ownership and management. For instance, if two or more sugar mills are combined under
the same ownership, it will be a case of horizontal integration. The benefits of its type of
integration are economies of large scale operations and evasion of unnecessary competition.

Diversification Growth Strategies:

Concentric diversification strategy:Company seeks new products that have technological
and/or marketing synergies with existing product lines.
Horizontal diversification strategy: Company searches for new products that are
technologically unrelated to its current product lines.
Conglomerate diversification strategy:Company seeks new businesses that have no
relationship to the companys current technology, products or markets.

Planning Marketing: Partnering to build customer

Relationships:
Customer relationship management (CRM) is an approach to managing a companys
interactions with current and future customers. It often involves using technology to organize,
automate, and synchronize sales, marketing, customer service and technical support.

Partner relationship management (PRM) is a business strategy for improving

communication between companies and their channel partners.

Partnering, with other departments in the company as well outside firms in the marketing
system, helps to build a superior value delivery network.

The Marketing Process:

Under the marketing concept, the firm must find a way to discover unfulfilled customer needs
and bring to market products that satisfy those needs. The process of doing so can be modeled in
a sequence of steps: the situation is analyzed to identify opportunities, the strategy is formulated
for a value proposition, tactical decisions are made, the plan is implemented and the results are
monitored.
1. Situation Analysis
A thorough analysis of the situation in which the firm finds itself as the basis for identifying
opportunities to satisfy unfulfilled customer needs. In addition to identifying the customer needs,
the firm must understand its own capabilities and environment in which it is operating.
The situation analysis thus can be viewed in terms an analysis of the external environmental and
an internal analysis of the firm itself. The external environment and an internal analysis of the
firm itself. The external environment can be described in terms of macro-environmental factors
that broadly affect many firms and micro-environmental factors closely related to the specific
situation of the firm.
The situation analysis should include past, present and future aspects. It should include a history
outlining how the situation evolved to its present state, and an analysis of trends in order to
forecast where it is going. Good forecasting can reduce the chance of spending a year bringing a
product to market only to find that the need no longer exists.
There are several frameworks that can be used to add structure to the situation analysis:
5C analysis company, customers, competitors, collaborators, climate. Company represents the
internal situation; the other four aspects of the external situation.
PEST analysis for macro-environmental political, economic, societal and technological
factors. A PEST analysis can be used as the climate portion of the 5C framework.

SWOT analysis- strengths, weaknesses, opportunities and threats for the internal and external
situation. A SWOT analysis can be used to condense the situation analysis into a listing of the
most relevant problems and opportunities and to assess how the firm is equipped to deal with
them.
2. Marketing Strategy
Once the best opportunity to satisfy unfulfilled customer needs is identified, a strategic plan for
pursuing the opportunity can be developed. Market research will provide specific market
information that will permit the firm to select the target market segment and optimally position
the offering within that segment. The result is a value to the target market. The marketing
strategy then involves:

Segmentation
Targeting (Target market selection)
Positioning the product within the target market
Value proposition to the market

3. Marketing Mix Decisions

Detailed tactical decisions then are made for the controllable parameters of the marketing mix.
The action items include:

Product development specifying, designing and producing the first units of the product
Pricing decisions
Distribution contracts
Promotional campaign development

4. Implementation and Control

At this point in the marketing plan has been developed and the product has been launched. Given
that few environments are static, the results of the marketing effort should monitored closely. As
the market changes, the marketing mix can be adjusted to accommodated the changes. Often,
small changes in consumer wants can be addressed by the changing the advertising message. As
the changes become more significant, a product redesign or an entirely new product may be
needed.

The marketing process does not end with implementation continual monitoring and adaptation is
needed to fulfill customer needs consistently over the long term.

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