Download Ch 2 - International Business courses

Strategic Market
Planning:
Take the Big Picture
Chapter Two
© 2012 Pearson Education, Inc. publishing as Prentice-Hall
Chapter Objectives
 Explain business planning and its
three levels
 Describe the steps in strategic
planning
 Describe the steps in marketing
planning
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.
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Real People, Real Choices:
Decision Time at First Flavor
 Should Jay diversify into new product
categories or focus on gaining market
acceptance for Peel ‘n Taste?
• Option 1: Investigate all three new
business ideas
• Option 2: Focus on Peel ‘n Taste only
until it gains market acceptance
• Option 3: Focus on Peel ‘n Taste but
investigate limited investment in
launching one of the new products
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Business Planning:
Compose the Big Picture
 Business Planning:
Ongoing process of making decisions
that guides the firm both in the short
term and for the long term
• Identifies and builds on firm’s strengths
• Helps managers make informed
decisions
• Develops objectives before action is
taken
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Ethics Is Up Front
in Marketing Planning
 Unethical marketing decisions damage
the firm, society, and stakeholders
 Business ethics
• Basic values that guide a firm’s
behavior
 Code of ethics
• Written standards of behavior, which
everyone in the organization must
subscribe
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Three Levels of Business Planning
 Strategic planning
• Undertaken by top-level corporate
management
 Functional planning
• Conducted by top functional-level
managers such as the chief marketing
officer
 Operational planning
• Done by supervisory managers
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Strategic Planning
 Managerial decision process that
matches firm’s resources and
capabilities to its market opportunities
for long-term growth and survival:
• Top management defines firm’s
purpose and objectives
• Strategic business units (SBUs) are
common in large firms
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Functional Planning
 Accomplished by various functional
areas of firm, such as marketing
 Typically includes:
• A broad three-to-five year-plan to
support the strategic plan
• A detailed annual plan
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Operational Planning
 First-line managers focus on day-today execution of functional plans
 Typically includes one or more of the
following:
• Detailed annual plans
• Semiannual plans
• Quarterly plans
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All Business Planning
Is an Integrated Activity
 Strategic, functional, and operational
plans must work together to benefit the
whole firm
• Plans are guided by firm’s mission
 Planners at all levels must keep the
“big picture” in mind when planning
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Strategic Planning:
Frame the Picture
 Very large multiproduct firms may have
divisions called strategic business
units (SBUs):
• SBUs operate like separate businesses
with their own mission, business
objectives, resources, managers, and
competitors
 Strategic planning is done at both the
corporate and SBU levels
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.
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Strategic Planning Step 1:
Define the Mission

Key questions in determining the mission:
• What is our type of business?
• What customers should we serve?
• How do we develop firm’s capabilities and
focus its efforts?

Mission statement
• A formal document that describes the firm’s
overall purpose and what it hopes to achieve
in terms of its customers, products, and
resources
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Step 1: Define the Mission
 Examples of mission statements
include:
• MADD: “to stop drunk driving, support
the victims of this violent crime, and
prevent underage drinking.”
• National Book Swap: “to become the
nation’s largest book club and in the
process bring a lifetime of reading
material to every American.”
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.
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Step 2: Evaluate the Internal
and External Environments
 Situational analysis:
• An assessment of a firm’s internal and
external environments
Internal
environmental assessment:
Identifies the firm’s strengths and
weaknesses
External environmental assessment:
Identifies opportunities and threats
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Internal Environment
 Controllable elements inside a firm that
influence how well the firm operates
include:
• Technologies, physical facilities,
financial stability, corporate reputation,
quality products, strong brands,
technologies, human and intellectual
capital, etc.
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External Environment
 Elements outside the firm that may
affect it either positively or negatively
 The external environment is global and
requires consideration of:
• Economic trends
• Competitive trends
• Technological trends
• Legal/political/ethical trends
• Sociocultural trends
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SWOT Analysis
 An analysis of an organization’s
strengths (S) and weaknesses (W) and
the opportunities (O) and threats (T) in
the external environment
 SWOT enables the firm to develop
strategies that maximize strengths and
capitalize upon opportunities
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Step 3: Set Organizational
or SBU Objectives
 Organizational/SBU Objectives
• What the firm hopes to accomplish with
long-range business plan
 Need to be specific, measurable,
attainable and sustainable:
• May relate to sales, profitability,
product development, market share,
productivity, ROI, customer
satisfaction, or social responsibility
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Step 4: Establish the Business
Portfolio
 Business portfolio
• The group of different products or
brands owned by a firm and having
different income-generating and growth
capabilities
 Portfolio analysis:
• Assesses the potential of a firm’s SBUs
• BCG growth-market share matrix
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Step 5: Develop Growth Strategies
 Product-market growth matrix:
• Characterizes different growth
strategies according to type of market
and type of product
• Matrix yields four potential strategies:
Market
penetration
Product development
Market development
Diversification
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.
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Marketing Planning
 Step 1: Perform a situation analysis:
• Builds on SWOT; and identifies how
environmental trends affect the
marketing plan
 Step 2: Set marketing objectives:
• Specific to the firm’s brands and other
marketing mix-related elements
• States what the marketing function
must accomplish if the firm is to
achieve its overall business objectives
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Marketing Planning
 Step 3: Develop marketing strategies to
achieve marketing objectives:
• Select target market(s) where the firm’s
offerings are best suited
• Develop marketing mix strategies:
Product
strategies
Price strategies
Promotion strategies
Distribution (place) strategies
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Marketing Planning

Step 4: Implement and control the marketing
plan :
• Measure actual performance
• Compare performance to the objectives
• Make adjustments

Marketing metrics

Create action plans
• Return on marketing investment (ROMI)
• Support plans that guide implementation and
control of marketing strategies
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Operational Planning:
Day-to-Day Execution of Plans
 Marketing planning occurs at the
functional level.
 At the operational level, plans focus on
the day-to-day execution of the
marketing plan:
• Created by first-line managers
• Cover short time frames
• Marketing metrics gauge success
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Real People, Real Choices:
Decision Made at First Flavor
 Jay chose option 3
• Why do you think Jay chose to focus on
Peel ‘n Taste until it gained market
acceptance, while also investigating the
opportunity to launch one of the new
products with limited resources?
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.
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Keep It Real: Fast-Forward to Next
Class Decision Time at eBay
 Meet Robert Chatwani, General
Business Manager of eBay
 eBay is developing a new online
marketplace to help small producers
and artisans gain global access
 The decision to be made includes:
How to create a marketplace for small
producers and artisans that would
maximize long-term revenue
and social impact
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.
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All rights reserved. No part of this publication may be
reproduced, stored in a retrieval system, or transmitted, in
any form or by any means, electronic, mechanical,
photocopying, recording, or otherwise, without the prior
written permission of the publisher. Printed in the United
States of America
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.
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