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Chapter 2
Strategic Market Planning:
Take the Big Picture
Chapter Objectives
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Explain the strategic planning process
Describe the steps in marketing planning
Explain operational planning
Explain the key role of implementation
and control on marketing planning
 Discuss some of the important aspects of
an organization’s internal environment
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Real People, Real Choices:
Decision Time at PaperBackSwap
 Which trend should Richard latch onto
in order to launch his new service into
the limelight?
– Option 1: Market the site as a way to help the
environment
– Option 2: Use PaperBackSwap as a vehicle
to promote literacy
– Option 3: Position the site as a cheap source
of entertainment
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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 haul
– Identifies/builds on firm’s strengths
– Helps managers make informed decisions
– Develops objectives before action is taken
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Ethics and
Marketing Planning
 Unethical marketing decisions damage
the firm, society, and stakeholders
 Business ethics:
– Rules of conduct for an organization
 Code of ethics:
– Written standards of behavior to which
everyone in the organization must subscribe
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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
• Example: increase firm’s total revenues by
20% over next five years
– Strategic Business Units (SBUs)
• Self-contained divisions
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Functional (Tactical) Planning
 Accomplished by various functional
areas of firm, such as marketing
 Typically includes:
– A broad 5-year plan to support strategic plan
– A detailed annual plan
• Example: marketing plan objective—to gain a
40% share of a particular market with three
new products during coming year
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Operational Planning
 First-line managers focus on day-today 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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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
 Answer three key questions:
– What business are we in?
– 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
– 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 (business review)
– 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 the 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
include:
– 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
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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 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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Step 4: Establish the Business
Portfolio
 Business portfolio:
– The group of different products or brands
owned by a firm and having different incomegenerating 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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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:
•
•
•
•
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Market penetration
Product development
Market development
Diversification
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Marketing Planning: Steps 1 and 2
 Perform a situation analysis
– Builds on SWOT; identifies how environmental
trends affect the marketing plan
 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 target market(s) where the firm’s
offerings are best suited
– Develop marketing mix strategies:
• Marketing mix strategies: how marketing will
accomplish its objectives in the firm’s target
market by using product, price, promotion,
and place (distribution)
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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
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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
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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 implementation and
control of marketing strategies
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Create and Work with
a Marketing Plan
 Written marketing plans encourage
concrete objectives and strategies
 Operational plans focus on the day-today execution of the marketing plan
 A firm’s corporate culture determines
much of its internal environment—the
values, norms, and beliefs that
influence everyone in the firm
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Real People, Real Choices:
Decision Made at PaperBackSwap
 Richard chose both option 1 and 3
– Richard felt that positioning the firm as a
provider of inexpensive entertainment while
doing something positive for the environment
stood the best chance of success
– Implementation: incorporated recycling
symbol into corporate logo; encouraged use
of Media Mail; members promoted to others
– Measuring success: over 5 million books
posted; usage increased by 55%
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Keep It Real: Fast-Forward to Next
Class Decision Time at eBay
 Meet Robert Chatwani, General
Business Manager of eBay
 eBay is developing a new online
marketplace to help small producers
and artisans gain global access
 The decision to be made:
Select a course of action that would
maximize long-term revenue
and social impact
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Publishing as Prentice Hall
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