Chapter 2Chapter 2

Strategic Planning Strategic Planning and the Marketing and the Marketing

ProcessProcess

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Chapter ObjectivesChapter Objectives

1. Distinguish between strategic planning and tactical planning.

2. Explain how marketing plans differ at various levels in an organization.

3. Identify the steps in the marketing planning process.4. Describe successful planning tools and techniques,

including Porter’s Five Forces model, first and second mover strategies, SWOT analysis, and the strategic window.

5. Identify the basic elements of a marketing strategy.6. Describe the environmental characteristics that

influence strategy decisions.7. Describe the methods for marketing planning, including

business portfolio analysis and the BCG matrix.

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Why do Planning?

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Why do Planning?Why do Planning?

To asses the company’s position [strengths and weaknesses], and the opportunities and threats it faces.

To set goals, establish priorities, and develop strategies.

To plan the deployment of resources needed to attain the goals selected.

To give firm direction. To make sure the goals

of all parties are aligned.

To ensure that different functional areas have coordinated efforts.

To outline potential alternative actions the firm can take.

To project costs. To assess performance.

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Marketing Planning: The Basics for Marketing Planning: The Basics for Strategy and TacticsStrategy and Tactics

Planning: Process of anticipating future events and conditions and of determining the best way to achieve organizational goals

Marketing planning: Implementing planning activities devoted to achieving marketing objectives

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Strategic Planning versus Tactical PlanningStrategic Planning versus Tactical Planning

Strategic planning: Process of determining an organization’s primary objectives and adopting courses action that will achieve those objectives

Tactical planning: Process that guides the implementation of activities specified in the strategic plan.

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Strategic Planning versus Tactical PlanningStrategic Planning versus Tactical Planning Top management

Greater proportions of their time engaged in planning

Usually focus their planning activities on long-range strategic issues

Middle level managers Focus on operational planning; creating

and implementing tactical plansSupervisors

Developing the specific programs to meet goals in their areas of responsibility

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Table 2.1:Table 2.1: Planning at Different Managerial LevelsPlanning at Different Managerial Levels

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Steps in the Marketing Planning ProcessSteps in the Marketing Planning Process

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Defining the Mission of the OrganizationDefining the Mission of the OrganizationMissionMission: the essential purpose that

differentiates one company from othersThe mission statement specifies the

organization’s overall goals and operational scope and provides general guidelines for future management actions

“An effective mission statement should be brief enough to fit on a T-Shirt.” – Peter Drucker.

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Determine Organizational ObjectivesDetermine Organizational ObjectivesAn organization lays out its basic objectives,

or goals, in its mission statementThese objectives in turn guide development

of supporting marketing objectives and plansWell-developed objectives should state

specific, quantitative intentions along with deadlines for achieving them

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Assessing Organizational Resources and Assessing Organizational Resources and Evaluating Environmental Risks and Evaluating Environmental Risks and OpportunitiesOpportunitiesThis step involves a back-and-forth

assessment of strengths, risks, and available opportunities.

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Formulating, Implementing, and Formulating, Implementing, and Monitoring a Marketing StrategyMonitoring a Marketing StrategyMarketing strategy: a firm’s overall

program for selecting and satisfying a target market

A marketing strategy is aimed at satisfying consumers in the selected target market through a careful balance of the elements of the marketing mix – each of which represents a subset of the overall marketing strategy

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Successful Strategies: Tools and Successful Strategies: Tools and TechniquesTechniques

All planning strategies have the goal of creating a sustainable competitive advantage for a firm.

An advantage where other companies cannot provide the same offering or value.

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Porter’s Porter’s Five Forces Five Forces ModelModel

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First Mover and Second Mover StrategiesFirst Mover and Second Mover StrategiesFirst 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 introducing new products that improve on the original offering to gain advantage in the marketplace.

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SWOTSWOT is an acronym for strengths, weaknesses, opportunities, and threats

A SWOT analysisSWOT analysis is a method of studying organizational resources and capabilities to assess the firm’s strengths and weaknesses and scanning its environment to identify opportunities and threats

Strengths reflect Core Competencies – what the company does well

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SWOT SWOT AnalysisAnalysis

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The Strategic WindowThe Strategic WindowA limited period with an optimal fit between

the key requirements of a market and the particular competencies of a firm.

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Elements of a Marketing StrategyElements of a Marketing Strategy

Blending the four strategy elements of marketing decision-making to satisfy chosen target marketsProductPriceDistributionPromotion

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Target MarketTarget MarketGroup of

people toward whom the firm decides to direct its marketing efforts

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Marketing Mix VariablesMarketing Mix VariablesProduct StrategyProduct Strategy

What goods or services to offerCustomer servicePackage designBrand namesTrademarksWarrantiesProduct Life Cycle PositioningNew-product development

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Figure 2.7Figure 2.7Quaker: Using

the Product and the Promotional Strategies to Appeal to the Toastables market

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Elements of the ChampionChampion Product Strategy

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Marketing Mix Variables Marketing Mix Variables Distribution StrategyDistribution Strategy

Planning that ensures that consumers find their products in the proper quantities at the right times and places.

Physical DistributionModes of transportationWarehousing Inventory controlOrder processing

Marketing ChannelsRetailersWholesalers

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Marketing Mix Variables Marketing Mix Variables Promotional StrategyPromotional Strategy

Blending together the various elements of promotion to communicate most effectively with the target market

Informing, persuading, and influencing a consumer’s purchase decision.

Main ElementsAdvertisingPromotion

IMC – Integrated Marketing Communications that ensure a unified and consistent message

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Figure 2.8Figure 2.8Promoting

the Healthful Benefits of Milk

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Advertising As a Part of the Pepto-Bismol Promotional Strategy

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Marketing Mix Marketing Mix Variables Variables Pricing StrategyPricing StrategyDeals with the

methods of setting profitable and justifiable prices

Figure 2.9Timex: Offering

Customers Style and Durability- at a Lower price

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The Marketing Environment –Marketing The Marketing Environment –Marketing Concerns:Concerns:CompetitivePolitical – LegalEconomicTechnologicalSocial – Cultural

Rule of three [P.52] – The three strongest, most efficient companies dominate 70% to 90% of the market. Examples: Fast Food, Cereal, Running Shoes, Airlines, Pharmaceuticules.

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Methods for Marketing PlanningMethods for Marketing Planning

Business Portfolio Analysis – Business Portfolio Analysis – evaluate evaluate divisions/products to determine strengths and divisions/products to determine strengths and weaknessesweaknesses

Strategic Business UnitsStrategic Business Units (SBUs) are key business units within diversified firms

A division, product line, or single product may define an SBU

Firms redesign their SBUs as market conditions dictate

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3M3MTape

Products: A 3M Strategic Business Unit

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The Boston Consulting Group MatrixThe Boston Consulting Group MatrixMarket Share/ Market Growth MatrixMarket Share/ Market Growth Matrix: a

marketing planning tool that classifies a firm’s SBU’s or products according to industry growth rates and market shares relative to competing productsStarsCash CowsDogsQuestion Marks

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Figure 2.10Figure 2.10BCG Market Share/Market Growth Matrix

Chapter 2 Appendix,Chapter 2 Appendix,Addendum Chapters 3, 22Addendum Chapters 3, 22

The Marketing The Marketing PlanPlan

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Organizational PlanningOrganizational Planning

Why are we in business? – Vision, Mission How do we do business? – Values, Climate,

Culture Where are we now? – SWOTs, Competition,

Constraints Where do we want to be? - Strategies How do we get there? – Tactics, Resources How do we know we’ve arrived? – Budgets,

Controls, Reports, Milestones

Addendum Chapter 22, P.672

Gap Analysis

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The Marketing PlanThe Marketing Plan

Contains detailed descriptions of the resources and actions needed to achieve stated marketing objectives.

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Why do a Marketing Plan?Why do a Marketing Plan?

To obtain external/internal financing To provide direction for overall business and

marketing strategies To support the development of long-term and

short-term organizational objectives To guide employees in achieving these

objectives To serve as a standard against which the

company’s/unit’s progress can be measured and evaluated

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Marketing Plan Project

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Define the Organization’s MissionDefine the Organization’s Mission

Mission – the essential purposes that differentiates us from other companies.

Examples on PP.42,43

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Marketing ObjectivesMarketing Objectives

Objectives = Goals Set by target market[s], product categories in

terms of sales, market share, profit, advertising/promotion objectives, customer loyalty, etc.

Must be measurable Must have a time set for completion Examples: Chapter Two,P.43 and

Addendum Chapter 3 P.76

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SWOTSWOT is an acronym for strengths, weaknesses, opportunities, and threats

A SWOT analysisSWOT analysis is a method of studying organizational resources and capabilities to assess the firm’s strengths and weaknesses and scanning its environment to identify opportunities and threats

Strengths reflect Core Competencies – what the company does well

Perform a Situation AnalysisPerform a Situation Analysis

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SWOT SWOT AnalysisAnalysis

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Develop a Marketing StrategyDevelop a Marketing Strategy

Overall, a companywide program for selecting a particular target market and then satisfying consumers in that market through the marketing mix - product, distribution, promotion, and price.

Compare to competitors Describe in terms of: market penetration, market

development, product development, or diversification Describe products as: Star, Cash Cow, Question

Mark, or Dog Describe in terms of: invest/grow,

selectivity/earnings, or harvest/divest Describe in terms of: price leadership, product

differentiation, product leadership, or following in price/product.

Refer to Addendum Chapter 3, P.76

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Tactical PlansTactical Plans

Market Structure Competitive Analysis Target

Markets/Customers Product/Services

Offering New

Products/Marketing Research

Pricing Strategy & Tactics

Promotional Plans – Advertising & Promotion

Distribution StrategyPhysical DistributionMarketing Channels

Marketing Staff Marketing Budgets Sales Plan Supporting Documents

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Monitoring ResultsMonitoring Results

Benchmarking Customer Satisfaction Research Marketing Cost Analysis Sales Analysis Marketing Audit

Addendum Chapter 22, PP.679-689

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Next ClassNext Class

January 31 Catch up on Chapters 5 and 8 Read Chapters 9 and 10