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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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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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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
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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.”
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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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HIGH
$
LOW
Market Growth Rate
Portfolio - BCG Matrix
HIGH
Copyright © 2012 Pearson Education, Inc. Publishing
as Prentice Hall
LOW
Relative Market Share
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
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EXISTING
Market Penetration
Product Development
NEW
Market Emphasis
Product-Market Growth Matrix
Market Development
Diversification
EXISTING
Copyright © 2012 Pearson Education, Inc.
Publishing as Prentice Hall
NEW
Product Emphasis
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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