Chapter 2 Strategic Planning and the Marketing Process
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 the concept of a SWOT analysis and its major elements.
Objectives • Discuss how a strategy can be implemented through marketing plans. • Identify the basic elements of a marketing strategy. • Describe the environmental characteristics that influence strategy decisions. • Explain how the strategic business unit concept, the market share/market growth matrix, the market attractiveness/business strength matrix, and spreadsheet analysis can be used in marketing planning.
Planning • The process of anticipating future events and conditions and determining the best way to achieve organizational objectives. • A continuous process that includes identifying objectives and includes checkpoints.
Plans Formulated Within the Marketing Organization • Product lines. • Pricing decision. • Selection of appropriate distribution channels. • Promotional campaigns. Planning helps us hit what we aim for.
A portfolio of products has helped Kraft obtain the position of market leader.
Strategic Planning • The process of determining an organization’s primary objectives. • Adopting courses of action that include allocation of necessary resources. • Typically longer term.
There are several businesses that offer help in strategic planning. The Patricia Seybold Group represents one such firm.
Tactical Planning • Guides the implementation of activities specified in the strategic plan . • Typically address shorter-term actions.
Planning at Different Management Levels Types of Planning Emphasized at This Level Management Level Examples Top Management Board of directors Chief executive officer (CEO) Chief operating officer (COO) Divisional vice presidents Strategic planning Organization-wide objectives; fundamental strategies; long-term plans; total budget Middle Management General sales manager Marketing research manager Advertising director Tactical planning Quarterly and semi-annual plans; divisional budgets; divisional policies and procedures Supervisory Management District sales manager Supervisors in staff Marketing departments Operational planning Daily and weekly plans; unit budgets; departmental rules and procedures
Mission • The essential purpose that differentiates the company from others. • Specifies the organization’s overall goals and operational scope. • Provides general guidelines for future management actions.
SWOT Analysis • An important strategic planning tool. • Helps planners to compare internal organizational strengths and weaknesses. • Acronym for • Strengths • Weaknesses • Opportunities • Threats • Provides managers with a critical view of the organization’s internal and external environments.
Elements of a Marketing Strategy Basic elements of a marketing strategy consist of: • The target market • The marketing mix variables of: • product • distribution • promotion • price
Marketing Mix Product Strategy • Deciding what goods or services the firm should offer to a group of consumers. • Includes making decisions about • Customer service • Package design • Brand names • Trademarks • Patents • Warranties • Life cycle of a product • Positioning the product in the marketplace • New product development
Marketing Mix Distribution (Place) Strategy • Ensures that consumers find their products in the proper quantities at the right times and places. • Involves: • modes of transportation • warehousing • inventory control • order processing • selection of marketing channels
Marketing Mix Promotion Strategy • The Communication link between sellers and buyers • Communicate messages directly through salespeople or indirectly through advertisements and promotions. • Companies use an approach called integrated marketing communications (IMC) so the consumer receives a unified and consistent message.
Marketing Mix Pricing Strategy • Methods of setting profitable and justifiable prices. • Closely regulated and subject to considerable public scrutiny. • A major influence is competition.
Planning Tools for Marketing Four specific tools: • Strategic business unit • Market share/market growth matrix • Market attractiveness/business strength matrix • Spreadsheet analysis
Strategic Business Units (SBUs) SBUs are key business units within diversified firms. • Each SBU • has its own managers, resources, objectives, and competitors. • pursues its own distinct mission. • develops its own plans independently. • focuses the attention of company managers so that they can respond effectively to changing consumer demand.
Market Share / Market Growth Matrix A four-quadrant chart that plots market share—the percentage of a market that a firm controls—against market growth potential. Relative Market Share High Low High Industry Growth Rate Low
The Boston Consulting GroupDevelopers of the Market Share / Market Growth Matrix
Market Attractiveness/Business Strength Matrix • Rates SBUs according to the attractiveness of their markets and their organizational strengths. • Marketing attractiveness criteria include: • Market share • Growth • Size • Stability • Potential profitability • Extent of government regulations • Potential environmental and social impact • Competitive conditions
Summary • Discussion has centered around: • Strategic and tactical planning • Planning at different organizational levels • The planning process • SWOT • Planning tools available