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Chapter 2
Strategic Market Planning:
Take the Big Picture
Chapter Objectives
1. Explain the strategic planning process
2. Understand the three levels of business
planning: strategic, functional and
operational
3. Describe the steps in marketing planning
4. Thoroughly discuss key marketing planning
concepts: Target Marketing & The
Marketing Mix
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Figure 2.1
Levels of Planning in a Company
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Strategic Planning
 Strategic Planning - Managerial decision
process that matches a firm’s resources and
capabilities to its market opportunities for longterm growth and survival
 Top management defines firm’s purpose (mission
statement) and objectives
Mission Statement Example: MADD: “to stop
drunk driving, support the victims of this violent
crime, and prevent underage drinking”
Objective Example: increase firm’s total
revenues by 20% over next five years
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Functional (aka “Tactical”) Planning
 Accomplished by various functional areas of firm,
such as Marketing, HR, Operations, etc
 Typically includes:
A broad 3- 5 year plan to support strategic plan
A detailed annual plan
Example: marketing plan objective for Ford:
The objective for the Ford Focus is to
achieve a 10% share of the subcompact
market during the 2010 calendar year
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Operational Planning
 First-line managers focus on day-to-day
execution of functional plans
 Such planning includes detailed annual,
semiannual, or quarterly plans
Example: an objective may be set in terms of
units of a product a particular salesperson
needs to sell per month (sales quota)
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All Business Planning
Is an Integrated Activity
 Strategic, functional, and operational plans must
work together to benefit the whole firm
 Marketers must fully understand how they fit
with the organization’s direction and resources
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Where the Marketing Planning Process
Fits Into overall Company Planning
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Why Write a Marketing Plan?
 Written marketing plans force companies to
have concrete objectives and strategies
 They provide a reference during the planning
period (1 year or several years) to stay on
track, get back on track, or get on track
 They can be shared with key company
employees and outsiders to educate them
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Marketing Planning: Step 1
What trends impact the marketing
plan for Netflix?
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Step 1 - Perform a
situation analysis
Builds on SWOT;
identifies how the
internal and
external
environments
affect the
marketing plan
Marketing Planning: Step 2
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
Stated in terms of sales volumes & market share
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Marketing Planning: Step 3
Step 3 - Develop marketing strategies to achieve
marketing objectives
Marketing strategy: a firm’s overall program for
selecting and satisfying their target markets
 A marketing strategy is aimed at satisfying
consumers in the selected target markets through a
careful balance of the elements of the Marketing
Mix – Product, Price, Place, & Promotion
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Formulating a Marketing Strategy
Target Market - Group of people toward
whom the firm decides to direct its marketing
efforts, by segmenting the market by:
Demographics – age, income, gender, etc
Psychographics – lifestyle & hobbies
Geographics – location of residence
Product-related - benefits, usage, loyalty
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Q. What would be a target market for the
new Nissan 370Z Convertible using each
of these segmentation methods?
http://www.theautochannel.com/news/2009/0
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Elements of the Marketing Mix
 Marketing Mix – a strategy is developed
for each element of the mix:
1.
2.
3.
4.
Product strategy
Distribution (Place) strategy
Promotion strategy
Pricing strategy
**The Marketing Mix consists of how the 4 are
blended together to fit the needs and
preferences of a specific target market
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1. Product Strategy (goods & services)
 What goods or services to offer
 Ingredients and features
 Customer service
 Package design
 Brand names
 Trademarks
 Warranties
 Product Positioning – how you want
customers to perceive the product
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2. Distribution Strategy
 Modes of transportation
 Warehousing
 Inventory control
 Order processing
 Supply channels (retailers, wholesalers, etc)
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3. Promotion Strategy
Blending together the various elements of
promotion to communicate most effectively
with the target market
Promotional elements (the Promotion Mix):
• Advertising
• Sales promotion
• Public relations
• Direct marketing
• Personal selling
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 Advertising As a Part
of the Pepto-Bismol
Promotional Strategy
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4. Pricing Strategy
 Deals with the methods of setting profitable
and justifiable prices
 Pricing is:
 Dependent upon competition
 Based upon supply and demand
 Closely regulated
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Marketing Planning
Step 4: Implement and Control the Marketing Plan
 Implement = Execute. DO IT!
 Control - Measuring actual performance,
comparing performance to the objectives, and
making adjustments where needed
 Marketing metrics:
Return on marketing investment (ROMI) - the
revenue generated by investment in a specific
marketing program divided by the cost of that
program (expenditure) at a given risk level
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Addendum – Strategic Planning
The following slides provide more
information about Corporate Level
Strategic Planning…
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Strategic Planning Step 1:
Define the Mission
 Answer three key questions:
1. What business are we in?
2. What customers should we serve?
3. How do we develop the 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 2: Evaluate the Internal
and External Environments
 Situational analysis
An assessment of a firm’s internal and
external environments
Internal environment: Controllable
elements inside of an organization
External environment: Uncontrollable
elements outside of an organization that
may affect its performance either
positively or negatively
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Internal Environment
 Controllable elements inside a firm that
influence how well the firm operates include:
People (human capital), physical facilities,
financial stability, corporate reputation,
quality products, strong brands,
technologies, etc.
 These elements represent key strengths and
weaknesses of the firm
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External Environment
 Elements outside the firm that may affect it
either positively or negatively:
Economic, competitive, technological,
legal/political/ethical, and sociocultural trends
Trends manifest as opportunities or threats
Firm cannot directly control external factors
but can respond to them via planning
Visit Trendwatching.com
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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
 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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Organizational/SBU Objectives
 Organizational/SBU Objectives:
What the firm hopes to accomplish with longrange 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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Strategic Business Units (SBUs)
Large firms like
the Walt Disney
Company usually
operate several
SBUs. Disney
SBUs include
theme parks,
movie studios,
TV networks, and
cruise line
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Figure 2.2
SBUs and the Strategic Plan
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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:
Assessing the potential of a firm’s SBUs
Helps make decisions regarding which
SBUs should receive more or less of
the firm’s resources
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Figure 2.3
Boston Consulting Group (BCG) Matrix
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Step 5: Develop Growth Strategies
 Product-market growth matrix:
Characterizes different growth strategies
according to type of market (new vs.
existing) and type of product (new vs.
existing).
Matrix yields four potential strategies:
Market penetration
Product development
Market development
Diversification
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Figure 2.4
Product-Market Growth Matrix
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