Download 2-7 Marketing: Real People, Real Decisions Strategic Planning

Marketing: Real People, Real Decisions
Strategic Planning
Chapter 2
Lecture Slides
Solomon, Stuart,
Carson, & Smith
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Marketing: Real People, Real Decisions
Chapter Learning Objectives
When you have completed your study of this chapter,
you should be able to:
• Explain the strategic planning process
• Tell how firms gain a competitive
advantage and describe the factors
that influence marketing objectives
• Describe the steps in the marketing
planning process
• Explain the factors involved in the
implementation and control of the
marketing plan
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Marketing: Real People, Real Decisions
Introduction to the Topic
“Organizations rarely plan to fail, but they often fail to
plan”
-famous quote, origin unknown.
• The above quotation speaks to the
importance of strategic planning and the
potential consequences of doing a poor job
at it.
• Planning helps organizations:
– To cope with rapidly changing factors
within their environment.
– Control its destiny through the setting
of objectives and taking actions to
achieve them.
– To ensure coordination of all decision
making within it by providing a
common vision
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Marketing: Real People, Real Decisions
Types of Planning
• Strategic planning: a managerial decision process that matches an
organization’s resources and capabilities to its market opportunities for
long term growth and survival
• Tactical planning:
a decision process that
concentrates on
developing detailed
plans for strategies and
tactics for the short term
that support an
organization’s long-term
strategic plan.
Figure 2.1
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Marketing: Real People, Real Decisions
Types of Planning (continued)
• Operational planning: a decision process that concentrates on
developing detailed plans for day-to-day activities that carry out an
organization’s tactical plans.
• Cross-functional
planning: an approach
to tactical planning in
which managers work
together in developing
tactical plans for each
functional area in the
firm, so that each plan
considers objectives of
the other areas.
Figure 2.1
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Marketing: Real People, Real Decisions
Strategic Planning: First Stage
• Mission statement: a formal statement in an organization’s
strategic plan that describes the overall purpose of the organization
and what it intends to achieve in terms of its customers, products, and
resources.
• A mission statement should:
– provide direction to all stakeholders as to
why the organization exists.
– be framed in terms that are neither too
narrow or too broad
– relate to a higher purpose other than just
providing a return to shareholders(?)
– match objectives to capabilities.
– be revisited and updated as the organization
changes
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Marketing: Real People, Real Decisions
Strategic Planning: Second Stage
• SWOT analysis: an analysis of an organization’s strengths and
weaknesses and the opportunities and threats in its external
environment.
• Internal environment: the
controllable elements inside an
organizations, including its
Strength
Weakness
people, its facilities, and how it
Internal factors
Internal factors
does things that influence the
Positive
Negative
operations of the organization.
• External environment:
the uncontrollable elements
outside of the organization that
may affect its performance
either positively or negatively.
Opportunity
Threat
External factors
Positive
External factors
Negative
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Marketing: Real People, Real Decisions
Strategic Planning: Third Stage
• Objectives: specific accomplishments or outcomes that an
organization hopes to achieve by a specific time.
• Objectives are developed from the
mission statement
• Can be expressed in terms of:
– Performance measures such as sales
revenue, profitability (ROI), market
share
– Product terms such as innovation,
industry leadership, quality
– Customer terms such as satisfaction
– Social responsibility
• To be effective, an objective needs to
pass the SMART test.
Specific
Measurable
Attainable
Realistic
Time-bounded
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Marketing: Real People, Real Decisions
The Business Portfolio
• Strategic business units (SBU): individual units within the firm
that operate like separate businesses, with each having its own mission,
business objectives, resources, managers, and competitors.
• Business portfolio: the
group of different products or
brands owned by an
organization and characterized
by different income-generating
and growth capabilities.
• Portfolio analysis: a
management tool for evaluating
a firm’s business mix and
assessing the potential of an
organization’s strategic business
units.
Figure 2.3 (enlarged on next slide)
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Marketing: Real People, Real Decisions
The Business Portfolio (Figure 2.3)
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Marketing: Real People, Real Decisions
The BCG Growth-Market Share Matrix
• Question marks: business units with low market shares in high
growth industries. Also known as problem children, these business
units can be relatively new to the market and grow to become stars or
dogs, depending on their success in achieving market share.
• Question marks need cash to fuel their growth.
• Stars: business units with
dominant market share in high
growth industries.
• These business units generate
large revenues, but still need
lots of cash to fuel their growth
and maintain share. They
become cash cows when the
market eventually slows down.
Figure 2.4
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Marketing: Real People, Real Decisions
The BCG Growth-Market Share Matrix
• Cash cows: business units with high market shares in low growth
industries. These business units generate the cash needed to fund new
product development and feed the question marks and stars.
• Cash cows are profitable because they have been around long enough
for the company to recover its development costs .
• Dogs: business units with low
market share in low growth
industries.
• These business units are those
question marks that did not
achieve significant market
share before the market slowed
down. They are targets for
divestiture as they just cost
money to maintain.
©Copyright 2003 Pearson Education Canada Inc.
Figure 2.4
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Marketing: Real People, Real Decisions
The Product-Market Growth Matrix
• Market penetration: growth strategies designed to increase sales
of existing products to current customers, non-users, and users of
competitive brands in served markets.
• Also known as the “work harder” strategy.
• Market
development: growth
strategies that introduce
existing products to new
markets.
• This can include
exporting, or finding new
uses for existing products.
• The baking soda people
are very good at this
strategy.
Figure 2.5
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Marketing: Real People, Real Decisions
The Product-Market Growth Matrix
• Product development: growth strategies that focus on selling new
products in served markets. This strategy is in keeping with the
marketing concept because it can be as simple as asking existing
customers what else they would like to buy from the company.
• Diversification: growth
strategies that emphasize
both new products and new
markets.
• Large companies such as
General Electric have the
resources to do this.
• Smaller companies may
take their focus away from
their core business, which
can prove to be fatal.
Figure 2.5
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Marketing: Real People, Real Decisions
The Marketing Planning Process
• Competitive advantage: the
ability of a firm to outperform the
competition, providing the
customers with a benefit the
competition cannot.
• Distinctive competency: a
Marketing Planning Process
•Analyze the marketing environment
•Set marketing objectives
•Develop marketing strategies
•Prepare a marketing plan
•Organize for implementation
•Establish the control process
capability of a firm that is
superior to that of its direct
competitors.
Implement
the Plan
• Differential benefits:
properties of products that set
them apart from competitors’
products by providing unique
customer benefits.
Control and Evaluate
the Plan
Figure 2.6
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Marketing: Real People, Real Decisions
Developing Marketing Strategies
• Marketing objectives will be
based on the organization’s
distinctive competencies and
resources and can be expressed in
terms of sales revenues or profits,
product terms, or in markets
served.
• Selecting the target
market(s) to be served is a
process that matches what the
company has to offer to those
groups who are most likely to
respond favourably.
• The marketing mix follows from
this selection.
Setting Marketing Objectives
•Sales objectives
•Product-oriented objectives
•Market objectives
Selecting a
Target Market(s)
Marketing Mix Programs
•Product strategies
•Pricing strategies
•Communication strategies
•Distribution strategies
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Marketing: Real People, Real Decisions
Preparing a Marketing Plan
• Marketing plan: a document that describes the marketing
environment, outlines the marketing objectives ad strategy, and
identifies who will be responsible for carrying out each part of the
marketing strategy.
• Situation analysis: the
first part of a marketing plan,
which provides a thorough
description of the firm’s
current situation including its
internal and external
environments; also called a
business review.
• May also include the SWOT
analysis discussed previously.
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Marketing: Real People, Real Decisions
Implementation and Control
• Implementation: the stage of the strategic management process in
which strategies are put into action on a day-to-day basis.
• Marketing budget: a statements of the total amount to be spent on
marketing and the allocation of money for each activity under the
marketer’s control.
• Trend analysis: an analysis of
past industry or company sales data
to determine patterns of change that
may continue into the future.
• Marketing audit: a
comprehensive review of a firm’s
marketing function. See Table 2.1
for a detailed listing of elements in a
marketing audit.
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Marketing: Real People, Real Decisions
Famous Last Words…
• Strategic planning is
important for helping
organizations to cope with
rapidly changing factors
within their environment.
• Effective marketing
strategies rarely happen by
accident, they are the result
of planning.
• I am planning on being
spontaneous now.
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