1 Chapter 2 Strategic Planning and the Marketing Process.

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Chapter 2

Strategic Planning and the Marketing Process

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Formal Planning Many companies operate without formal

plans, yet these plans can provide many benefits such as: Encouraging management to think ahead

systematically. Forcing managers to clarify objectives and

policies. Better coordination of company efforts. Clearer performance standards for control. Helping the company to anticipate and respond

quickly to environmental changes and sudden developments.

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Strategic Planning

Strategic Planning is the Process of Developing and Maintaining a

Strategic Fit Between the Organization’s Goals and Capabilities

and Its Changing Marketing Opportunities.

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Steps in Strategic Planning(Fig. 2.1)

Defining theCompanyMission

Setting CompanyObjectivesand Goals

Designingthe Business

Portfolio

Planning, marketing,and other functionalStrategies

Corporate LevelBusiness unit,

product,and market

level

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Market OrientedMarket Oriented

RealisticRealistic

Fit Market EnvironmentFit Market Environment

Distinctive CompetenciesDistinctive Competencies

MotivatingMotivating

Specific

Characteristics of a Good Mission

Statement:

A Mission Statement is a Statement of the Organization’s Purpose.

Defining the Company’s Business and Mission

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Setting Company Objectives and Goals

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M iss ionS ta tem en t

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Designing the Business Portfolio

The business portfolio is the collection of businesses and products that make up the company.

The company must: analyze its current business portfolio or

Strategic Business Units (SBU’s) decide which SBU’s should receive more, less,

or no investment develop growth strategies for adding new

products or businesses to the portfolio

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Question Marks

• High growth, low share • Build into Stars or phase out • Require cash to hold market share

Question Marks

• High growth, low share • Build into Stars or phase out • Require cash to hold market share

Stars

• High growth & share• Profit potential • May need heavy investment to grow

Cash Cows

• Low growth, high share• Established, successful SBU’s•Produce cash

Cash Cows

• Low growth, high share• Established, successful SBU’s•Produce cash

Dogs

• Low growth & share • Low profit potential

Dogs

• Low growth & share • Low profit potential

Relative Market ShareHigh Low

Mark

et

Gro

wth

Rate

Low

H

igh

Analyzing Current SBU’s:Boston Consulting Group Approach

?

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Business Strength

High

Medium

Low

Strong Average Weak

A

B

C

D

Ind

ustr

y

Att

racti

ven

ess

Analyzing Current SBU’s:GE’s Strategic Business-Planning Grid

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Can be Difficult, Time-Consuming, & Costly to ImplementCan be Difficult, Time-Consuming, & Costly to Implement

Difficult to Define SBU’s & Measure Market Share/ GrowthDifficult to Define SBU’s & Measure Market Share/ Growth

Focus on Current Businesses, But Not future PlanningFocus on Current Businesses, But Not future Planning

Can Lead to Unwise Expansion or DiversificationCan Lead to Unwise Expansion or Diversification

Problems With Matrix Approaches

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1. Market Penetration

2. Market Development

3. Product Development

4. Diversification

ExistingMarkets

NewMarkets

ExistingProducts

NewProducts

Product/ Market Expansion Grid

Developing Growth Strategies in the Age of Connectedness

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Product/ Market Expansion Grid

Market Penetration: making more sales to current customers without changing its products. How? Add new stores in current market

areas, improve advertising, prices, service or store design.

Market Development: develop new markets for its current products.

How? Identify new demographic or geographic markets.

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Product/ Market Expansion Grid

Product Development: offering modified or new products to current markets. How? New styles, flavors, colors, or

modified products. Diversification: new products for new

markets. How? Start up or buy new businesses.

Discussion Connections

Beyond evaluating current business, designing the business portfolio involves finding future businesses and products the company should consider.

Apply the product/ market expansion grid to assess how one of the following companies might grow: Dell computer Kodak Levi-Strauss E*Trade online investment services

Assign each of the choices to a separate small group, have the group develop the answer, then discuss each approach in class.

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GuidingPhilosophy

Inputs to StrategicPlanners

Marketing’s Role in Strategic Planning

DesignsStrategies

Planning Cross-Functional Strategies

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TargetConsumers

Product

Place Price

Promotion

Mar

ketin

g

Im

plem

enta

tion

Marketing

Planning

Marketing

Control

Mar

ketin

g

Analysis

Competitors

MarketingIntermediaries

PublicsSuppliers

Demographic-Economic

Environment

Technological-Natural

Environment

Political-Legal

Environment

Social-Cultural

Environment

The Marketing Process (Fig. 2.5)

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Connecting With Customers

Market Segmentation: determining distinct groups of buyers (segments) with different needs, characteristics, or behavior.

Market Targeting: evaluating each segment’s attractiveness and selecting one or more segments to enter.

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Connecting With Customers

Market Positioning: arranging for a product to occupy a clear, distinctive, and desirable place relative to competing products in the minds of target consumers. i.e. Chevy Blazer is “like a rock.”

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Marketing Strategies for Competitive Advantage

Strategy a Company Adopts

Depends on Its Industry Position

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TargetCustomers

IntendedPositioning

Product“Goods-and-service”combination that a company offers a

target market

PriceAmount of moneythat consumers have to pay to

Obtain the product

Activities that persuade target customers to buy

the product

Promotion

Company activitiesthat make the

product available

Place

Developing the Marketing Mix

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The 4 P’s & 4C’s of the Marketing Mix

4 P’s Product Price Place Promotion

4 P’s Product Price Place Promotion

4 C’s Customer Solution Customer Cost Convenience Communication

4 C’s Customer Solution Customer Cost Convenience Communication

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Marketing Planning

Develop StrategicPlans

Develop

MarketingPlans

Marketing Planning

Develop StrategicPlans

Develop

MarketingPlans

MarketingImplementation

Carry OutThe

Plans

MarketingImplementation

Carry OutThe

Plans

Marketing Analysis of Company’s SituationMarketing Analysis of Company’s Situation

Control

MeasureResults

EvaluateResults

TakeCorrective

Action

Managing the Marketing Effort (Fig. 2.7)

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Executive Summary

Current Marketing Situation

Threats and Opportunity Analysis

Objectives and Issues

Marketing Strategy

Action Programs

Budgets

Controls

Contents of a Marketing Plan(Table 2.2)

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Marketing StrategyMarketing Strategy

Marketing PerformanceMarketing Performance

Implementation

Climate andCulture

ActionPrograms

Decisionand

RewardOrganizationalStructure

HumanResources

Marketing Implementation

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MarketManagement

CombinationPlan

ProductManagement

Geographic

Functional

Ways to Carry Out Marketing Activities

Marketing Department Organization

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Marketing Control Process

(Fig. 2.8)

Set Goals

Measure Performance

Evaluate Performanc

e

Take Corrective

Action

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Review of Concept Connections

Explain companywide strategic planning and its four steps.

Discuss how to design business portfolios and growth strategies.

Explain functional planning strategies and asses marketing’s role in strategic planning.

Describe the marketing process and the forces that influence it.

List the marketing management functions, including the elements of a marketing plan.