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Education, Inc. Publishing as
Prentice Hall
02
Strategic Market Planning
The Big Picture
Learning Objectives



Understand the importance of strategic planning

Describe the steps in strategic planning

Describe the steps in marketing planning

Understand a basic outline for a marketing plan
Define strategic business units (SBUs)
Explain business planning and its three levels
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The Marketing Plan
Copyright © 2012 Pearson Education, Inc. Publishing as Prentice Hall
What is Business Planning?
Composing 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/builds on firm’s strengths
 Helps managers make informed decisions
 Develops objectives before action is taken

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Marketing and
Ethics
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Ethics Is Up Front
in Marketing Planning
 Business ethics:
• Basic values that guide a firm’s
behavior
 Code of ethics:
• Written standards of behavior to which
everyone in the organization must
subscribe
 Difference between value, morals,
ethics (see supplemental PPT)
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Figure 2.1
Three Levels of Business Planning
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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
 Strategic planning is done at both the
corporate and SBU levels
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Characteristics of
Strategic Business Units (SBUs)
An SBU …
g
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has a distinct mission & specific target market
has control over its resources
has its own competitors
has plans independent of other SBUs
Charter Club, Alfani, Style & Co.
Figure 2.2
Steps in Strategic Planning
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Strategic Planning Step 1:
Define the Mission

Key questions in determining the mission:
• What business are we in?
• What customers should we serve?
• How do we develop firm’s capabilities and
focus its efforts?

Mission statement (find a 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 (con’t)
 Examples of mission statements
• 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.”
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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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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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SWOT Analysis
Internal
S
W
O
External
T
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Strengths - things the firm does well
Weaknesses - things the firm does not!
Opportunities - conditions in the
external environment that favor
strengths
Threats - conditions in the external
environment that do not relate to
existing
strengths or favor areas of
©South-Western College Publishing
current weakness.
Internal Environment
 Controllable
elements
inside a firm
that influence
how well the
firm operates
 Any examples?
Southwest Airlines’ employees reflect
the “Southwest Spirit” and are
considered a key strength of the firm.
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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:
• Legal/political/ethical trends
• Economic trends
• Competitive trends
• Technological trends
• Sociocultural trends
• Demographic
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Table 2.2 Part A
Example of a Partial SWOT
Analysis for McDonald’s
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Table 2.2 Part B
Example of a Partial SWOT
Analysis for McDonald’s
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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 be financially focused, or focused
on other factors such as satisfaction
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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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HIGH
$
LOW
Market Growth Rate
Portfolio - BCG Matrix
HIGH
Copyright © 2012 Pearson Education, Inc. Publishing
as Prentice Hall
LOW
Relative Market Share
Figure 2-3
Boston Consulting Group (BCG) Matrix
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.
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Step 5: Develop Growth Strategies
Product-market growth or Ansoff’s matrix:
Characterizes different growth strategies according
to type of market and type of product
H. Igor Ansoff was a Russian American, applied
mathematician and business manager. He is known
as the father of Strategic management.
f
The Ansoff Matrix was first published in the
Harvard Business Review in 1957, and has given
generations of marketers and business leaders a
quick and simple way of thinking about growth.
(mindtools.com)
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Figure 2-4
Product-Market Growth Matrix
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.
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Ansoff’s Opportunity Matrix
Market
Penetration
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Increase market share among
existing customers
Market
Development
Attract new customers to
existing products
Product
Development
Create new products for
present markets
Diversification
Introduce new products
into new markets
Example of Ansoff’s Strategic
Opportunity Matrix-Starbucks
Present Product
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New Product
Present
Market
Market Penetration
Product Development
Starbucks sells more coffee to
customers who register their
reloadable Starbucks cards.
Starbucks develops
powdered instant coffee Via
or Blond Roast.
New
Market
Market Development
Diversification
Starbucks opens stores in
Brazil and Chile.
Starbucks launches Hear
Music and buys Ethos Water.
Marketing Planning
 Step 1: Perform a Situation Analysis
• Builds on SWOT; 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 firm is to achieve its overall
business objectives
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Marketing Planning: Step 3
 Develop marketing
strategies to achieve
marketing objectives
• Select a Target
Market- who is the
customer for the
firm’s products
• Develop Marketing Mix
strategies (4 P’s)
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.
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Marketing Mix Strategies
 Product strategies:
• Include product design, packaging,
branding, support services, and
product variations and features
 Pricing strategies:
• Include setting prices for final
consumers, wholesalers, and
retailers based on costs, demand,
or competitors’ prices
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.
First
Flavor
Video
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Marketing Mix Strategies

Promotion strategies:
• Advertising, sales
promotion, public
relations, direct
marketing, personal
selling

Distribution (place)
strategies:
• How, when, and where
the product is available
to targeted customers
© 2012 Pearson Education, Inc. publishing as Prentice-Hall.
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The Marketing Mix
A unique blend of PRODUCT, PRICE,
PROMOTION AND PLACE (distribution)
strategies designed to produce mutually
satisfying exchanges with a target market.
The elements of the marketing
mix are often referred to as the
“Four Ps”
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Step 4: Implement and Control
the Marketing Plan
 Control:
• Measuring actual performance,
comparing performance to the
objectives, making adjustments
 Marketing metrics:
• Return on marketing investment (ROMI)
 Action plans:
• Support plans that guide the execution
and control of marketing strategies at
the operational level
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Metrics Moment
 ROMI is the revenue or
profit margin generated by
investment in a specific
marketing program
divided by the cost of that
program (expenditure) at a
given risk level, as
determined by
management
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Table 2.4
Template for an Action Plan
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Operational Planning:
Day-to-Day Execution of Plans
 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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