CHAPTER TWO

Strategic Planning and Budgeting

STRATEGIC BUSINESS UNIT

• ...is a single product or brand, a line of products, or a mix of related products that meets a common market need or a group of related needs.

STRATEGIC BUSINESS UNIT (SBU)

• operates as a separate business

• has separate management

• has distinct mission statement

• has unique customer segments

• has own competitors

• has a separate planning function

STRATEGIC MANAGEMENT PLANNING

• Business Mission

• Establishing Goals

• Developing Strategies

BUSINESS MISSION

• Mission statements provide a sense of direction

• They may outline:

– growth & profitability objectives

– philosophy & values

BUSINESS MISSION

• Factors impacting it’s creation include:– Environmental constraints– Firm’s history– Existing competencies– Resources

FROM THE INTERNET

• Mission Statements = Profits <http://www.smartbiz.com/sbs/arts/ hph4.htm>

FROM THE INTERNET

• Read about setting personal mission statements at: <http://www.salestrainingplus.com/ articles.htm#MissionStatement>

• Also, read the previous article entitled “Future Trends in Sales and Marketing”

GOALS AND OBJECTIVES

• Goals are qualitative; objectives are quantitative

• Hierarchy

STRATEGY

• “A strategy is a means an organization uses to achieve its objectives.”

GENERIC BUSINESS STRATEGIES (Porter)

• Low Cost

• Differentiation

• Niche

LOW COST STRATEGYIMPLICATIONS

• Service large, current accounts

• Pursue large prospects

• Sell on the basis of price

DIFFERENTIATION STRATEGY IMPLICATIONS

• Sell non-price benefits

• Provide high quality service

• Train sales force to provide quality

NICHE STRATEGY IMPLICATIONS

• Become an expert on target market

• Focus on non-price benefits

BUSINESS STRATEGIES (Miles and Snow)

• Prospectors

• Defenders

• Analyzers

• Reactors

MILES AND SNOW--IMPLICATIONS

• Prospector– Focus on sales volume; prospecting

• Defender– Maintain current customers; emphasize

service

• Analyzer– Balance servicing and prospecting– Consider new products

MARKETING STRATEGY

• Selection of a target market

• Development of a marketing mix

MARKETING STRATEGY

• Starts with a situational analysis

• A snapshot of where we are today

SITUATIONAL ANALYSIS

• Demand trends: forecasts, sales

• Consumer Behavior: who buys, who makes the decision

• Social/cultural factors

• Economic and business conditions

• Technology

• Competitive and corporate environment

FROM THE INTERNET

• Situational Analysis for State of Hawaii--Department of Tourism <http://kumu.icsd.hawaii.gov/tourism/ STP/SWOT.html>

SALES MANAGEMENT STRATEGIES

• Sales force strategy

• Account relationship strategy

SALES FORCE STRATEGY

• Company Managed Sales Force

• Distributor Networks

• Hybrid Systems

ACCOUNT RELATIONSHIP STRATEGY

• Repeat transactions

• Contractual relationships

• Major account relationships

• Strategic partners

• See chart, page 59

SALES BUDGETING

SALES BUDGETING

• A sales budget is a set of planned expenses that is prepared on an annual basis (Text; page 62)

BUDGETING PROCESS

• Design marketing strategy

• Estimate sales

• Estimate personal selling costs

• Compare actual expenditures with estimates

• Revise where necessary

SALES BUDGET RESEARCH

• Sales expenses relate to sales growth

• Salespeople pay better returns than advertising

• Percentage of sales method still remains most popular approach to budgeting

FROM THE TEXT

• Read everything in Chapter 2 (46 to 66).