Download What is Marketing?

Marketing: An Introduction
Second Canadian Edition
Armstrong, Kotler, Cunningham, Mitchell and Buchwitz
Chapter Two
Strategic Planning and the
Marketing Process
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Copyright © 2007 Pearson Education Canada
Looking Ahead
• Explain companywide strategic planning and
its four steps.
• Discuss business portfolio design and
strategies.
• Explain marketing’s role in strategic planning
and the importance of value chains and
networks.
• Describe the elements of a customer-driven
marketing strategy and mix.
• List the marketing management functions and
elements of a marketing plan.
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What Is Strategic Planning
Strategic Planning is the process of
developing and maintaining a strategic
fit between the organization’s goals and
capabilities and its changing marketing
opportunities.
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Steps in Strategic Planning
• Corporate level
– Define the company mission.
– Set company objectives and goals.
– Design the business portfolio.
• Business unit, product and market levels.
– Plan marketing and other functional
strategies.
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Strategic Planning
• Defining a clear company mission.
– Setting supporting objectives.
– Designing a sound business portfolio.
– Coordinating functional strategies.
• Mission Statement
– States the organization’s purpose.
– Market and customer-oriented.
– Provides direction to internal
stakeholders.
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Mission Statement Answers
• What is our business?
• Who is the customer?
• What does the customer value?
• What should our business be?
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Successful Mission Statements
• Are specific.
• Are realistic.
• Are motivating.
• Are customer-centric.
• Fit the market environment.
• Are based on distinctive competencies.
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Strategic Business Unit (SBU)
• A unit of the company that has a
separate mission and objectives and that
can be planned independently from other
company businesses.
• Can be a company division, a product
line within a division or sometimes a
single product or brand.
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Business Portfolio
• The business portfolio is the collection of
businesses and products that make up
the company.
• The company must:
– Analyze its current business portfolio or Strategic
Business Units (SBUs).
– Decide which SBUs should receive more, less or
no investment.
– Develop growth strategies for growth or
downsizing.
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Analyze Current Situation
• Portfolio analysis.
– Evaluates relative strength of all
businesses in the company.
• Strategic Business Unit analysis.
– Evaluates strength of each independent
business unit in company.
– Growth-Share Matrix key analysis tool.
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BCG Growth-Share Matrix
Stars
Business
strength,
growth rate,
cash use
Defend position
Cows
Nurture to
generate cash
???
Use cash to make
into a star
Dogs
Fix or abandon
Industry attractiveness, market
share, cash generation
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Potential Matrix Problems
• Can be time consuming and costly.
• Difficult to define SBUs and measure
market share and growth.
• Focus on the current business, not
future planning.
• Can place too much emphasis on
growth.
• Can lead to poorly planned
diversification.
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Analyze Opportunities
• Product-Market Expansion Grid identifies
four potential growth areas.
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Existing
Products
New
Products
Existing
Markets
Market
Penetration
Product
Development
New
Markets
Market
Development
Diversification
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Growth at Tim Horton’s
• To maintain its phenomenal growth in an
increasingly over-caffeinated
marketplace, Tim Horton’s uses an
ambitious, well-planned multi-pronged
growth strategy.
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Tim Horton’s and PME Grid
• Market penetration.
– Make more sales to current customers without
changing products.
– Add new stores in current market areas; improve
advertising, prices, menu, service.
• Market development.
– Develop new markets for current products.
– Review new demographic such as women, youth.
– Examine large potential U.S. market.
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Tim Horton’s and PME Grid
• Product development.
– Offering modified or new products to current
markets.
– Add lunch offerings and iced drinks, sell coffee in
supermarkets, co-brand products.
• Diversification.
– Start up or buy businesses outside current
products and markets.
– Making and selling CDs, testing restaurant
concepts or branding casual clothing.
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Marketing’s Role in
Strategic Planning
• Provide a guiding philosophy.
• Provide inputs to strategic planners.
• Design strategies to research objectives.
• Measure results.
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The Value Chain/Network
• Value chain.
– the series of departments which carry out valuecreating activities to design, produce, market,
deliver and support a firm’s products.
• Value delivery network.
– the network made up of the company, suppliers,
distributors and ultimately, customers who “partner”
with each other to improve the performance of the
entire system.
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The Marketing Process
•
•
•
•
•
Analyze current situation.
Analyze marketing opportunities.
Select target markets.
Develop the marketing mix.
Manage the marketing effort.
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Select Target Segment
• Segment market.
– Divide larger market into groups of people
with similar demands and responses.
• Target segment.
– evaluate segments and select one or more
segments to enter.
• Position.
– Create differentiation relative to competing
products in minds of target customers.
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Market Segmentation
• The process of dividing a market into
distinct groups of buyers with different
needs, characteristics or behaviours
who might require separate products or
marketing programs.
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Segmentation Variables
• Market segment.
– A group of consumers who respond in a
similar way to a given set of marketing
efforts.
– Can be segmented along different
dimensions:
•
•
•
•
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Demographic variables
Geographic location
Behavioural variables
Psychographic variables
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Target Marketing
• Involves evaluating each market
segment’s attractiveness and selecting
one or more segments to enter.
• Good target segments must be able to
sustain profitability.
• Example:
– Arm & Hammer’s baking soda
– Bayer Aspirin
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Market Positioning
• Arranging for a product to occupy a clear,
distinctive and desirable place relative
to competing products in the minds of
target consumers.
• Process begins with differentiating the
company’s marketing offer so it gives
consumers more value.
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The Marketing Mix
The set of controllable, tactical
marketing tools that the firm blends to
produce the response it wants in the
target market.
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Create Marketing Mix
• Product – offers the right product,
service or experience.
• Price – controls perceived value and
satisfaction.
• Place – allows customers easy access
to product and support.
• Promotion – communicates the offer
and the value proposition.
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The Four Ps and the Four Cs
• PRODUCT provides CUSTOMER SOLUTION
• PRICE represents CUSTOMER COST
• PLACE provides CONVENIENCE
• PROMOTION is 2-way COMMUNICATION
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Manage Marketing Effort
• Build strong operational marketing plan.
• Carry out the plan.
– Organize marketing department.
– Leverage value chain and value network.
• Exercise control.
– Set goals.
– Measure and evaluation performance.
– Take corrective action.
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A Marketing Plan
• Executive summary.
– Summary of main goals/recommendations.
– Table of contents follows.
• Current marketing situation.
– Market description.
– Product review.
– Competitive review.
– Review of distribution.
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Marketing Plan (cont’d)
• Threat and opportunity analysis.
– External trends and factors in the marketing
environment.
– May affect the firm and its strategies.
• Objectives and issues.
– What the company wants to achieve with
the plan.
– Sales, profits, market share, positioning.
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Marketing Plan (cont’d)
• Marketing strategy.
– Marketing mix elements and expenditures.
– How the strategy fits the opportunity.
• Action program.
– How the strategy will be implemented.
• Budgets.
– Forecasted revenues and expenses.
• Controls.
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Marketing Dept Organization
• Functional.
– Divided by task e.g.. Sales, advertising,
research, customer service.
– Each functional area headed by specialist.
• Geographic.
– Teams focused on particular areas.
– Complete set of sales/marketing functions
exist within each geographic team.
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Marketing Dept Organization
• Product management.
– Teams focused on specific products or
brands.
– Typical of large companies with many
product lines or brands.
• Market or customer management.
– Teams focused on key customers or
markets.
• Combination of two or more common.
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Marketing Control Process
• Set goals.
– What do we want to achieve?
• Measure performance.
– What is happening?
• Evaluate performance.
– Why is it happening?
• Take corrective action.
– What should we do about it?
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Looking Back
• Explain companywide strategic planning and
its four steps.
• Discuss business portfolio design and
strategies.
• Explain marketing’s role in strategic planning
and the importance of value chains and
networks.
• Describe the elements of a customer-driven
marketing strategy and mix
• List the marketing management functions
and elements of a marketing plan.
2-35
Copyright © 2007 Pearson Education Canada