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Chapter 1 Strategic Planning and the Marketing Management Process McGraw-Hill/Irwin Copyright © 2013 by The McGraw-Hill Companies, Inc. All rights reserved. 1-1 The Marketing Concept • An organization should seek to make a profit by serving the needs of customer groups • The purpose is to rivet the attention of marketing managers on customer orientation, rather than on product orientation or selling orientation • The principal task of the marketing function Find effective and efficient means of making the business do what suits the interests of customers 1-2 Marketing • The activity, set of institutions, and processed for creating, communicating, delivering, and exchanging offerings that have value for customers, clients, partners, and society at large 1-3 Figure 1.1 - Major Types of Marketing 1-4 Strategic Planning and Marketing Management • Strategic planning: • All the activities that lead to the development of a clear organizational mission • Organizational objectives • Appropriate strategies to achieve the objectives for the entire organization 1-5 Figure 1.2 - The Strategic Planning Process 1-6 Organizational Mission • In developing a statement of mission, management must take into account three key elements: • The organization’s history • The organization’s distinctive competitiveness • The organization’s environment 1-7 Organizational Mission • An effective mission statement should be: • • • • Focused on markets rather than products Achievable Motivating Specific 1-8 Organizational Objectives • Objectives must be: • Specific • Measurable • Action commitments 1-9 Organizational Objectives • If formulated properly, organizational objectives: • Can be converted into specific action • Will provide direction • Can establish long-run priorities for the organization • Can facilitate management control 1-10 Figure 1.3 - Sample Organizational Objectives 1-11 Organizational Strategies • Organizations can pursue various strategies based on: • Products and markets • Competitive advantage • Value 1-12 Figure 1.4 - Organizational Growth Strategies 1-13 Organizational Strategies Based on Competitive Advantage • Cost leadership strategy - A firm would focus on being the low-cost company in its industry • Strategy based on differentiation - A firm seeks to be unique in its industry or market segment along particular dimensions that the customers value 1-14 Strategies Based on Value • Three value strategies: • Best price • Best product • Best service 1-15 Choosing an Appropriate Strategy • Management should: • Select those strategies consistent with its mission • Capitalize on the organization’s distinctive competencies • Sustainable competitive advantage can be based on either the assets or skills of the organization 1-16 Organizational Portfolio Plan • The first step in this approach is to identify the various divisions, product lines, and so on that can be considered a business • Also called strategic business units (SBUs) • The next step is to establish methods to determine how resources should be allocated among the various SBUs • Known as portfolio models 1-17 The Marketing Management Process • Process of planning and executing the conception, pricing, promotion, and distribution of goods, services, and ideas to create exchanges with target groups that satisfy customer and organizational objectives 1-18 Figure 1.5 - Strategic Planning and Marketing Planning 1-19 Situation Analysis • Involves analysis of the past, present, and likely future in six major areas of concern: • Cooperative environment - Includes all firms and individuals who have a vested interest in the firm’s accomplishing its objectives • Competitive environment - Includes primarily other firms in the industry that rival the organization for both resources and sales 1-20 Situation Analysis • Economic environment - State of the macroeconomy and changes in it also bring about marketing opportunities and constraints • Social environment - Includes general cultural and social traditions, norms, and attitudes • Political environment - Includes the attitudes and reactions of the general public, social and business critics, and other organizations 1-21 Situation Analysis • Legal environment - Includes a host of federal, state, and local legislation directed at protecting both business competition and consumer rights 1-22 Marketing Planning • Produces three outputs: • Establishing marketing objectives • Selecting the target market • Developing the marketing mix • Marketing mix: A set of controllable variables that must be managed to satisfy the target market and achieve organizational objectives 1-23 Implementation of the Marketing Plan • Involves putting the plan into action and performing marketing tasks according to the predefined schedule 1-24 Control of the Marketing Plan • Involves three basic steps: • Measuring results of implemented marketing plan • Comparing results with objectives • Making decisions on whether plan is achieving objectives 1-25 Marketing Information Systems and Marketing Research • Throughout the marketing management process, current, reliable, and valid information is needed to make effective marketing decisions • Providing this information is the task of the marketing information system and marketing research 1-26 The Strategic Plan, The Marketing Plan, and Other Functional Area Plans • Strategic planning is a top-management responsibility • Ways in which marketing executives are involved in the strategic planning process: • They influence the process by providing important inputs in the form of information and suggestions relating to customers, products, and middlemen • They must always be aware of what the process of strategic planning involves as well as the results 1-27 Marketing’s Role in Cross-Functional Strategic Planning • More organizations are bringing managers and employees together to participate in crossfunctional teams • All personnel working in a cross-functional team participate in creating a strategic plan to serve customers • The greatest advantage of cross-functional team is the ability of team members to consider a situation from a number of viewpoints 1-28 Marketing’s Role in Cross-Functional Strategic Planning • Strategic planning results in a clearly defined blueprint for management action in all functional areas of the organization 1-29 Figure 1.6 - The Cross-Functional Perspective in Planning 1-30 Figure 1.7 - A Blueprint for Management Action 1-31