Chapter 2 Strategic Planning and the Marketing Process
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.
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.
Steps in Strategic Planning(Fig. 2.1) Business unit, product, and market level Corporate Level Planning, marketing, and other fuctional Strategies Setting Company Objectives and Goals Defining the Company Mission Designing the Business Portfolio
Market Oriented Realistic Characteristics of a Good Mission Statement: Fit Market Environment Distinctive Competencies Specific Motivating Defining the Company’s Business and Mission A Mission Statement is a Statement of the Organization’s Purpose.
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
Analyzing Current SBU’s:Boston Consulting Group Approach Relative Market Share High Low • Stars • High growth & share • Profit potential • May need heavy • investment to grow • Question Marks • High growth, low share • Build into Stars or phase out • Require cash to hold • market share Market Growth Rate Low High • Dogs • Low growth & share • Low profit potential • Cash Cows • Low growth, high share • Established, successful • SBU’s • Produce cash
Analyzing Current SBU’s:GE’s Strategic Business-Planning Grid Business Strength Strong Average Weak C High A Medium Industry Attractiveness D B Low
Can be Difficult, Time-Consuming, & Costly to Implement Difficult to Define SBU’s & Measure Market Share/ Growth Problems With Matrix Approaches Focus on Current Businesses, But Not future Planning Can Lead to Unwise Expansion or Diversification
Developing Growth Strategies in the Age of Connectedness Product/ Market Expansion Grid Existing Products New Products Existing Markets 1. Market Penetration 3. Product Development 4. Diversification 2. Market Development New Markets
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.
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.
Planning Cross-Functional Strategies Marketing’s Role in Strategic Planning Guiding Philosophy Inputs to Strategic Planners Designs Strategies
Marketing Analysis Marketing Planning Product Target Consumers Place Price Promotion Marketing Implementation Marketing Control The Marketing Process (Fig. 2.5) Demographic- Economic Environment Technological- Natural Environment Marketing Intermediaries Suppliers Publics Political- Legal Environment Social- Cultural Environment Competitors
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.
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.”
Marketing Strategies for Competitive Advantage Strategy a Company Adopts Depends on Its Industry Position
Developing the Marketing Mix Price Amount of money that consumers have to pay to Obtain the product Product “Goods-and-service” combination that a company offers a target market Target Customers Intended Positioning Activities that persuade target customers to buy the product Promotion Company activities that make the product available Place
4 P’s Product Price Place Promotion 4 C’s Customer Solution Customer Cost Convenience Communication The 4 P’s & 4C’s of the Marketing Mix
Marketing Analysis of Company’s Situation Managing the Marketing Effort (Fig. 2.7) Control Marketing Planning Develop Strategic Plans Develop Marketing Plans Marketing Implementation Carry Out The Plans Measure Results Evaluate Results Take Corrective Action
Contents of a Marketing Plan(Table 2.2) Executive Summary Current Marketing Situation Threats and Opportunity Analysis Objectives and Issues Marketing Strategy Action Programs Budgets Controls
Marketing Strategy Marketing Implementation Organizational Structure Decision and Reward Human Resources Marketing Performance Action Programs Climate and Culture Implementation
Marketing Department Organization Functional Combination Plan Geographic Ways to Carry Out Marketing Activities Market Management Product Management
Marketing Control Process (Fig. 2.8) Measure Performance Evaluate Performance Take Corrective Action Set Goals
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.