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Copyright © 2007 McGraw-Hill Ryerson Limited Objectives To understand: • The concept of environmental scanning and how forces outside a company play a role in strategic marketing planning. • The role of the internal environment in guiding and supporting marketing strategies and their implementation. • The nature and scope of planning and how it fits within the management process. • Similarities and differences among mission, objectives, strategies, and tactics. Copyright © 2007 McGraw-Hill Ryerson Limited Objectives To understand: • The essential difference between strategic company planning and strategic marketing planning. • The steps involved in strategic marketing planning. • The purpose and contents of an annual marketing plan. • How a planning model can be a useful aid in developing a marketing program. Copyright © 2007 McGraw-Hill Ryerson Limited The Environment for Strategy and Planning • Involves three sets of factors or forces: 1. External macro-environmental forces 2. External micro-environmental forces 3. Internal non-marketing forces Copyright © 2007 McGraw-Hill Ryerson Limited Relationship-Insensitive External Environmental Forces Copyright © 2007 McGraw-Hill Ryerson Limited Relationship-Insensitive External Environmental Forces 1. Demographic Change • Refers to the statistical study of human populations. • The key is to look for changes. • • • • • Aging boomers Greater number of seniors More single-person households Tweens and their economic influence One must consider the implications of these trends. Copyright © 2007 McGraw-Hill Ryerson Limited Relationship-Insensitive External Environmental Forces 2. Economic Conditions • Consumer spending is affected by: • • • • Stage of the business cycle Inflation Interest rates Unemployment rates Copyright © 2007 McGraw-Hill Ryerson Limited Relationship-Insensitive External Environmental Forces 3. Social and Cultural Forces • The way consumers lead their lives • • Lifestyles, values and beliefs. Include: • • • • • • • Emphasis on quality of life Immigration brings changing values Erosion of gender roles and stereotypes Attitudes toward physical fitness and food Emphasis on service and relationship quality Concern for environment Desire for convenience Copyright © 2007 McGraw-Hill Ryerson Limited Relationship-Insensitive External Environmental Forces 4. Competition • Competitors’ activities shape a company’s marketing system. • • • • Direct brand and store competition from marketers of similar and directly competing brands and services Indirect competition Competition for the consumer’s limited buying power Competition is coming from unexpected sources, including more foreign. Copyright © 2007 McGraw-Hill Ryerson Limited Relationship-Insensitive External Environmental Forces 5. Technology • Failure to remain innovative threatens a firm’s ability to remain competitive. • Major technological breakthroughs have three primary impacts on marketing: • • • Start entirely new industries Alter radically or virtually destroy existing industries Stimulate other markets and industries Copyright © 2007 McGraw-Hill Ryerson Limited Relationship-Insensitive External Environmental Forces 6. Political and Legal Forces • Legislation exercises more influence on the marketing activity of a business than any other part of its operations. • • • • • • General monetary and fiscal policies Legislative framework and government agency codes and policies Social legislation Government relationships with individual industries Legislation specifically related to marketing Provision of information and the purchase of products Copyright © 2007 McGraw-Hill Ryerson Limited Relationship-Sensitive External Environmental Forces • Controllable environmental forces. • External to the firm, but part of its marketing system due to its close relationship. • Micro-environment can be influenced. • Are relationship-sensitive, as it is of considerable importance for the firm to establish solid relationships with these partners in its success. Copyright © 2007 McGraw-Hill Ryerson Limited Relationship-Sensitive External Environmental Forces Copyright © 2007 McGraw-Hill Ryerson Limited Relationship-Sensitive External Environmental Forces 1. The Market Environment • Made up of customers and prospective customers. • Three factors to consider: • • • People or organizations with needs or wants Their purchasing power Their expectations and buying behaviour Copyright © 2007 McGraw-Hill Ryerson Limited Relationship-Sensitive External Environmental Forces 2. Suppliers • Critical to marketing success. • Growing importance of supplier relationships. Copyright © 2007 McGraw-Hill Ryerson Limited Relationship-Sensitive External Environmental Forces 3. Marketing Intermediaries • Aid directly in the flow of goods and services. • • Wholesalers Various facilitating organizations Copyright © 2007 McGraw-Hill Ryerson Limited Internal Non-Marketing Forces • Internal forces influence the firm’s marketing strategies, programs and activities. • Have the potential to affect customer satisfaction. • Controllable. • Relationship-sensitive. • Require careful relationship building. Copyright © 2007 McGraw-Hill Ryerson Limited Relationship-Sensitive Internal Environmental Forces Copyright © 2007 McGraw-Hill Ryerson Limited Marketing Planning • Consists of: 1. Planning a marketing program 2. Implementing the program 3. Evaluating its performance Copyright © 2007 McGraw-Hill Ryerson Limited A Company’s Complete Marketing Environment Copyright © 2007 McGraw-Hill Ryerson Limited Nature of Marketing Planning • Mission • Objectives and goals • Strategies and tactics Copyright © 2007 McGraw-Hill Ryerson Limited Marketing Planning • Occurs at two different levels: • • • Company level Marketing unit or departmental level Results in two plans: 1. Strategic marketing plan 2. Annual plan Copyright © 2007 McGraw-Hill Ryerson Limited Three Levels of Organizational Planning Copyright © 2007 McGraw-Hill Ryerson Limited 1. Strategic Company Planning • • Company level. Four steps: 1. 2. 3. 4. Defining the organization’s mission Analyzing the situation the company is facing Setting organizational objectives Selecting strategies to achieve these objectives Copyright © 2007 McGraw-Hill Ryerson Limited 2. Strategic Marketing Planning • • Marketing unit or department level. Five step process, completed for each major functional area: 1. Conducting a situation analysis 2. Determining marketing objectives 3. Identifying target markets and measuring market demand 4. Deciding on positioning and differential advantage 5. Designing a marketing mix Copyright © 2007 McGraw-Hill Ryerson Limited 3. Annual Marketing Plan • Plan prepared for each major product or SBU. • Summarizes strategies that will be used to achieve specific objectives over the year. • Points out other activities that must be performed in implementation and evaluation. • Outlines who is responsible and what resources must be made available. • Represents a “road map” to guide marketing activity over the coming year. Copyright © 2007 McGraw-Hill Ryerson Limited Contents of the Annual Plan • Exact content is determined by an organization’s circumstances. • • • • • • • • Executive summary Situational analysis – including resources Objectives tailored to organizational goals Strategies relating to segments and marketing mix Tactics: Activities to carry out strategies Financial schedules and projections Timetable to guide implementation Evaluation of performance against goals Copyright © 2007 McGraw-Hill Ryerson Limited Planning Models • SBU – Strategic Business Unit • To be identified as an SBU, an entity must: • • • • Be a separately identifiable business Have a distinct mission Have its own competitors Have its own executive group with profit responsibility Copyright © 2007 McGraw-Hill Ryerson Limited Planning Model Boston Consulting Group Matrix • Classifies each SBU or major product according to market share and industry growth potential. • • • • Stars: High market share, high growth Cash Cows: High share, low growth prospects Question Marks: Low share in high growth sectors Dogs: Low market share and low growth • Position in matrix suggests marketing strategy to be used. Copyright © 2007 McGraw-Hill Ryerson Limited The Boston Consulting Group Copyright © 2007 McGraw-Hill Ryerson Limited