Chapter Objectives

1. Strategic Planning and the Marketing Process CHAPTER2 Chapter Objectives Distinguish between strategic planning and tactical planning. Explain how marketing plans differ at various levels in an organization. Identify the steps in the marketing planning process. Describe successful planning tools and techniques, including Porter’s Five Forces model, first and second mover strategies, SWOT analysis, and the strategic window. Identify the basic elements of a marketing strategy. Describe the environmental characteristics that influence strategic decisions. Describe the methods for marketing planning, including business portfolio analysis and the BCG matrix. 1 4 5 2 6 3 7

2. MARKETING PLANNING: THE BASIS FORSTRATEGY AND TACTICS • Planning Process of anticipating future events and conditions and of determining the best way to achieve organizational objectives. • Marketing planning Implementing planning activities devoted to achieving marketing objectives. STRATEGIC PLANNING VERSUS TACTICAL PLANNING • Strategic planning Process of determining an organization’s primary objectives and adopting courses of action that will achieve these objectives. • Provides long-term direction for decision makers. • Tactical planning Planning that guides the implementation of activities specified in the strategic plan. • Addresses shorter-term actions and current near-term activities.

3. PLANNING AT DIFFERENT ORGANIZATIONAL LEVELS • Focus on planning changes in different levels of the organization.

4. STEPS IN THE MARKETING PLANNING PROCESS DEFINING THE ORGANIZATION’S MISSION AND OBJECTIVES • Mission Essential purpose that differentiates one company from another. • Examples: • 3M: “To solve unsolved problems innovatively.” • Mary Kay Cosmetics: “To give unlimited opportunity to women.” • Merck: “To preserve and improve human life.” • Objectives—Guide the development of marketing objectives and plans. • Examples: • Generate a 10 percent profit over the next twelve months. • Attain a 20 percent share of the market by 2010. • Add 50 new stores within the next year.

5. ASSESSING ORGANIZATIONAL RESOURCES AND EVALUATING ENVIRONMENTAL RISKS AND OPPORTUNITIES • Resources include the capabilities of the firm’s production, marketing, finance, technology, and employees. • Strengths help planners set objectives, develop plans, and take advantage of marketing opportunities. FORMULATING, IMPLEMENTING, AND MONITORING A MARKETING STRATEGY • Should be efficient, flexible, adaptable, and implemented company-wide. • Blends elements of the marketing mix: product, distribution, promotion, and price.

6. SUCCESSFUL STRATEGIES: TOOLS ANDTECHNIQUES • Goal of tools and techniques is to create sustainable competitive advantage. PORTER’S FIVE FORCES MODEL • Porter’s Five Forces Model developed by strategy expert Michael Porter that identifies five competitive forces that influence planning strategies: • The threat of new entrants • The bargaining power of buyers • The bargaining power of suppliers • The threat of substitute products • Rivalry among competitors

8. FIRST MOVER AND SECOND MOVER STRATEGIES • First mover strategy Theory advocating that the company that is first to offer a product in a marketplace will be the long-term market winner. • Second mover strategy Theory that advocates observing closely the innovations of first movers and then improving on them to gain advantage in the marketplace. SWOT ANALYSIS • SWOT analysis Analysis that helps planners compare internal organizational strengths and weaknesses with external opportunities and threats. THE STRATEGIC WINDOW • Strategic window Limited periods during which the key requirements of a market and the particular competencies of a firm best fit together. • Example: Soaring demand for cars in China.

9. ELEMENTS OF A MARKETING STRATEGY THE TARGET MARKET • The group of people toward whom the firm directs its marketing efforts and merchandise. • Need to pay attention to growing market segments. • Example: Growing Hispanic population in United States. MARKETING MIX VARIABLES • Marketing mix Blending of the four strategy elements—product, distribution, promotion, and pricing—to fit the needs and preferences of a specific target market.

10. THE MARKETING ENVIRONMENT • Five external dimensions that affect the marketing mix variables: • Competitive, political-legal, economic, technological, and social- cultural factors. • Rapid technological changes can spur lawsuits and create new forms of competition. • Rule of three—The three strongest, most efficient companies dominate 70 to 90 percent of a market. • Example: Cereal manufacturers—General Mills, Kellogg’s, and Post.

11. METHODS FOR MARKETING PLANNING BUSINESS PORTFOLIO ANALYSIS • An evaluation of a company’s products and divisions to determine the strongest and weakest ones. • Strategic business units Key business units within diversified firms. • Each has its own managers, resources, objectives, and competitors. • Help focus the attention of managers. • Example: Hewlett-Packard’s iPaq unit for its handheld computer.

12. BCG ANALYSIS • Developed by Boston Consulting Group. • A market share/market growth matrix that plots market share against market growth potential.